The DCIT, Central Circle-1,, Baroda. v. M/s. Agrawal Cotspin Pvt. Ltd.,, Baroda.

ITSSA 69/AHD/2004 | misc
Pronouncement Date: 22-10-2010 | Result: Dismissed

Appeal Details

RSA Number 6920516 RSA 2004
Assessee PAN AABCA6989Q
Bench Ahmedabad
Appeal Number ITSSA 69/AHD/2004
Duration Of Justice 6 year(s) 7 month(s) 10 day(s)
Appellant The DCIT, Central Circle-1,, Baroda.
Respondent M/s. Agrawal Cotspin Pvt. Ltd.,, Baroda.
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 22-10-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 22-10-2010
Date Of Final Hearing 12-10-2010
Next Hearing Date 12-10-2010
Assessment Year misc
Appeal Filed On 12-03-2004
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI JM AND D C. AGRAWAL AM) IT (SS) A NO.69/AHD/2004 BLOCK PERIOD: 01-04-1990 TO 23-01-2001 THE D. C I. T. CENTRAL CIRCLE-1 6 TH FLOOR AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 VS M/S. AGRAWAL COTSPIN PVT. LTD. AT MODASAR ROAD TAL : SANKHEDA BODELI BARODA PA NO. AABCA 6989 Q (APPELLANT) (RESPONDENT) IT (SS) A NO.84/AHD/2004 BLOCK PERIOD: 01-04-1990 TO 23-01-2001 M/S. AGRAWAL COTSPIN PVT. LTD. AT MODASAR ROAD TAL SANKHEDA BODELI BARODA VS THE D. C I. T. CENTRAL CIRCLE-1 6 TH FLOOR AAYAKAR BHAVAN RACE COURSE CIRCLE BARODA 390 007 PA NO. AABCA 6989 Q (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI K. R. MEGHWAL DR ASSESSEE BY S/SHRI S. N. SOPARKAR AND M. BAKSHI AR O R D E R PER BHAVNESH SAINI: BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-IV AHMEDAB AD DATED 31-12-2003 FOR THE ABOVE BLOCK PERIOD. 2. THE REVENUE CHALLENGED THE ORDER OF THE LEARNED CIT(A) IN RESTRICTING THE ADDITION OF RS.36 27 634/- TO RS.13 73 000/- GRANTING RELIEF OF RS.22 54 424/- MADE ON ACCOUNT OF UNEXPLA INED STOCK. THE ASSESSEE HAS HOWEVER CHALLENGED THE ORDER OF THE L EARNED CIT(A) IN IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 2 CONFIRMING THE ADDITION OF RS.13 72 210/- ON ACCOUN T OF DIFFERENCE IN VALUATION OF THE STOCK. 3. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOT H THE PARTIES PERUSED THE FINDINGS OF THE AUTHORITIES BELOW AND C ONSIDERED THE MATERIAL ON RECORD. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY IS ENGAGED IN THE BUSINESS OF COTTON TRADING GINNING PRESSING AND CRUSHING OF COTTON SEEDS DEALING IN OIL CAKES ETC. A SEARCH WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 23-01-2001 ALONG WITH OTHER GROUP CONCERNS WHICH WERE MAINLY CONTROL LED MANUBHAI K. AGRAWAL AND FAMILY MEMBERS. THE ASSESSEE FILED RETU RN OF INCOME SHOWING UNDISCLOSED INCOME OF RS.78 360/-. THE AO H OWEVER ASSESSED THE SAME AT RS.39 64 520/-. IN THE CROSS APPEALS THE DISPUTE IS REGARDING ADDITION OF RS.36 27 634/- MADE ON ACCOUN T OF VALUE OF STOCK. THE ISSUE HAS BEEN DISCUSSED BY THE AO IN PARA 3 OF HIS ORDER. IT IS RECORDED BY HIM THAT DURING THE COURSE OF SEARCH AN D SEIZURE AT THE PREMISES OF THE ASSESSEE EXCESS STOCK OF RS.36 27 6 34/- WAS FOUND. IN THIS CONNECTION STATEMENT OF SHRI MANUBHAI K. AGRAW AL THE KEY PERSON OF THE GROUP AND ALSO THE DIRECTOR OF THE ASSESSEE COMPANY WAS RECORDED U/S 132 (4) OF THE IT ACT IN WHICH HE INTER ALIA A DMITTED THE INVESTMENT IN EXCESS STOCK AS UNEXPLAINED INCOME OF THE ASSES SEE. HOWEVER IT IS SEEN THAT NO INCOME ON THIS ACCOUNT HAS BEEN DISCLO SED IN THE RETURN OF INCOME FILED FOR THE BLOCK PERIOD. THE AO ASKED EXP LANATION OF THE ASSESSEE IN THIS REGARD. THE ASSESSEES REPLY IS IN CORPORATED IN THE IMPUGNED ORDERS AND IT WAS BRIEFLY EXPLAINED THAT T HE ASSESSEE HAD A STOCK OF COTTON BALES COTTON SEEDS ETC. OF AN AMO UNT OF RS.275.45 LACS AS PER THE BOOKS OF ACCOUNT AND STOCK RECORDS MAINT AINED. ON THE DATE OF SEARCH PHYSICAL VERIFICATION OF THE STOCK WAS DO NE WITHIN SHORT TIME AND STOCK VALUE WAS DETERMINED AT RS.3 08 03 190/- AND DIFFERENCE OF IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 3 THE ABOVE AMOUNT WAS DETERMINED. SINCE THE STATEMEN T WAS RECORDED AT ABOUT 9.30 PM THEREFORE THE DIFFERENCE OF THE STO CK VALUE WAS ACCEPTED AND OFFERED FOR TAXATION. THEREAFTER THE ASSESSEE VERIFIED THE RECORD AD IT WAS FOUND THAT THE DIFFERENCE WAS INCORRECT. THEREF ORE ON 29-03-2001 IT WAS EXPLAINED BEFORE THE DDIT. IT WAS EXPLAINED THA T SEARCH PARTY ON ESTIMATE BASIS MADE THE VALUATION OF THE STOCK. HOW EVER THE ASSESSEE HAS TABULATED THE QUANTITY AS AVAILABLE FROM THE ST OCK REGISTER WHICH IS SEIZED AND HAVE ADOPTED THE ESTIMATE RATE TAKING FO R VALUING PHYSICAL QUANTITY OF THE STOCK AND IN THIS MANNER THE VALUE OF INVENTORY DERIVED BY THE ASSESSEE IS AT RS.275.45 LACS (VALUATION ENC LOSED) AS AGAINST RS.271.75 LACS DETERMINED BY THE SEARCH PARTY. THE ASSESSEE THEREFORE EXPLAINED THE DISCREPANCY TO THE EXTENT OF RS.3.70 LACS (RS.275.45 LACS (-) RS.271.75 LACS). IT WAS ALSO EXPLAINED THAT THERE I S A NORMAL TRADE PRACTICE THAT INVOICES FOR SALES ARE DRAWN ON A PAR TICULAR DATE AND DELIVERY IS MADE AS PER INSTRUCTION OF THE CUSTOMER S AND FOLLOWING THIS PRACTICE INVOICES OF SALE OF 200 BALES FOR SALE ON LOT NO.34 AND 37 WAS MADE ON VARIOUS DATES BY THE ASSESSEE COMPANY TO M/ S. JAYANTI PREMCHAND ON 03-01-2001 AND 05-01-2001 IN A SUM OF RS.18 84 034/- DETAILS OF WHICH ARE NOTED IN THE IMPUGNED ORDERS. ON APPRECIATION OF SUCH INVOICES STOCK WAS REDUCED IN THE STOCK REGIST ER IF IN FACT THE MATERIAL WAS LYING IN THE BUSINESS PREMISES WHICH W AS FOUND AT THE TIME OF PHYSICAL VERIFICATION BY THE SEARCH PARTY. HOWEV ER THIS MATERIAL WAS DISPATCHED ON VARIOUS DATES ON 25-01-2001 27-01-20 01 AND 31-01- 2001 IN BATCHES OF 50 BALES ON FOUR OCCASIONS. IT W AS SUBMITTED SINCE THE INVOICES IN THE MATERIAL IS IDENTIFIABLE AND IS PRO VED BY THE MATERIAL ON RECORD THEREFORE FOR THE MATERIAL BELONGING TO TH E PURCHASES NO ADDITION CAN BE MADE. IT WAS ALSO EXPLAINED THAT TH E CUSTOMER HAD TAKEN INSURANCE OF THE MATERIAL OWNED. THEREFORE THE ABO VE AMOUNT WAS NOT SHOWN IN THE RETURN OF INCOME. THE AO HOWEVER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE ON THE REASONS THAT SHRI MANUBHAI K. AGRAWAL IN HIS STATEMENT CATEGORICALLY ACCEPTED THE TOTAL S TOCK FOUND IN THE IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 4 PREMISES OF THE ASSESSEE AND QUANTITY AND COST WAS ALSO ACCEPTED WITHOUT ANY OBJECTION TO THE VALUATION AND AGREED T O PAY THE TAX. THEREFORE THE CONTENTION OF THE ASSESSEE WAS REJEC TED WITH REGARD TO DISCREPANCY OF RS.3 70 000/-. WITH REGARD TO THE GO ODS DISPATCHED TO M/S. JAYANTI PREMCHAND THE AO NOTED THAT SPECIFIC QUESTION WAS ASKED DURING THE COURSE OF SEARCH IF THE GOODS BELONG TO ANY OTHER PARTY BUT THE ASSESSEE DID NOT EXPLAIN THE SAME. THE AO ALSO DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE THE ASSESSEE DID NOT BRING THIS FACT TO THE NOTICE OF THE DEPARTMENT FOR ABOUT 2 MONTHS. TH E AO ACCORDINGLY DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE AND ALSO NOTED THAT THE RATES AND VALUATION TALLY WITH THE INVENTORY AS ACCEPTED BY THE ASSESSEE. THE AO ALSO NOTED THAT WHEN MAXIMUM INVENTORY IS ACCEPT ED BY THE ASSESSEE WITH THE SAME FIGURES SHOWN BY THE ASSESSEE THERE WAS NO REASON TO DISPUTE ONLY 4 ITEMS OF THE INVENTORY OUT OF 11 ITE MS AND THE ASSESSEE IS DISPUTING THE VALUATION WITHOUT ANY EVIDENCE. THE A DDITION WAS ACCORDINGLY MADE BY THE AO. 5. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LEARNED CIT(A) AND SAME SUBMISSIONS WERE REITERATED. WITH REGARD TO MI STAKE IN VALUATION OF THE STOCK THE ASSESSEE CONTENDED THAT THE SEARCH P ARTY HAD VALUED THE STOCK FOUND AT THE RATE WHICH WAS HIGHER THAN THE P REVAILING RATE AND HAS TAKEN FOR VALUING THE STOCK AS PER BOOK. IT WAS ASSERTED THAT THE VALUATION OF THE STOCK HAS TO BE DONE AT THE SAME R ATE TO ARRIVE AT THE DIFFERENCE AND BY VALUING THE STOCK ON SUCH BASIS THE VALUATION OF STOCK AS PER THE BOOKS WAS DETERMINED AT RS.2 75 45 946/ - AGAINST THE VALUATION TAKEN BY THE AO TO BE RS.2 71 75 556/-. T HE ASSESSEE POINTED OUT SUCH VARIATION WHICH WAS PERUSED BY THE LEARNED CIT(A) AND ACCEPTED THE CONTENTION OF THE ASSESSEE BECAUSE THE VALUATION SHALL HAVE TO BE IDENTICAL ON LIKEWISE BASIS. BY APPLYING THE RATE AS MENTIONED IN THE BOOKS OF ACCOUNT IT HAS BEEN WORKED OUT AT RS. 2 71 75 556/-. THE LEARNED CIT(A) ALSO NOTED THAT THE AO HAS GIVEN MUC H IMPORTANCE TO THE IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 5 STATEMENT OF SHRI MANUBHAI K. AGRAWAL AND AGREED WI TH THE CONTENTION OF THE ASSESSEE BECAUSE RATES ARE VERIFIABLE FROM T HE RECORD ITSELF. THE LEARNED CIT(A) ALSO NOTED THAT THE AO SHOULD HAVE V ERIFIED THE RECORDS BUT HE FAILED TO DO SO AND MERELY REPLIED UPON THE STATEMENT. THE LEARNED CIT(A) ALSO NOTED THAT IN VIEW OF THE FACT THAT RATES HAS TO BE APPLIED ON LIKEWISE BASIS WHICH ARE VERIFIABLE FROM RECORD THEREFORE THE AO WAS DIRECTED TO REDUCE THE ADDITION TO RS.3 70 3 90/-. WITH REGARD TO 200 COTTON BALES SOLD TO JAYANTI PREMCHAND BOOKS O F ACCOUNT OF THIS PARTY WERE PRODUCED ALONG WITH PARTNERS AND THE ACC OUNTANT ATTENDED THE PROCEEDINGS. ON VERIFICATION OF THE SALES AND P URCHASE REGISTERS THE LEARNED CIT(A) NOTED THAT ON THE SAME DATE ON 03-01 -2001 AND 05-01-2002 WHEN INVOICES OF THE PURCHASES WERE ENTE RED INTO OTHER INVOICES NO.76 77 78 AND 79 DATED 03-01-2001 AND 05-01-2001 (200 BALES) WERE SOLD TO THE SAME PARTY AND THE DATES OF SALES ARE 08-01-2001 AND 17-01-2001. THE LEARNED CIT(A) THEREFORE NOTE D THAT IN FACT 400 BALES WERE SOLD BY THE ASSESSEE TO M/S. JAYANTI PRE MCHAND OUT OF WHICH 200 BALES WERE LIFTED PRIOR TO THE SEARCH AND 200 B ALES WERE FOUND KEPT ON THE DATE OF SEARCH. THE LEARNED CIT(A) NOTED THA T ALL THE INVOICES ARE SUPPORTED BY DELIVERY CHALLAN AND TRANSPORT RECEIPT ETC. THE AO HOWEVER REFUSED O ACCEPT SUCH EVIDENCES BECAUSE THE SAME MI GHT HAVE BEEN MANIPULATED. THE LEARNED CIT(A) THEREFORE DID NOT ACCEPT THE CONTENTION OF THE AO BECAUSE EVERYTHING IS AVAILABLE ON RECORD WHICH IS ALSO SUBJECTED TO CROSS VERIFICATION FROM THE CONCERN PA RTY. THEREFORE THE ENTIRE EVIDENCES SHOULD HAVE BEEN CLOSELY SCRUTINIZ ED AT THE ASSESSMENT STAGE. THE AO WITHOUT ANY REASON IGNORED THE EVIDEN CES. M/S. JAYANTI PREMCHAND PRODUCED THE RECORDS BEFORE THE LEARNED C IT(A) AND ACCEPTED THE SALES MADE BY THE ASSESSEE TO THEM. THE LEARNED CIT(A) THEREFORE ACCEPTED THE CONTENTION OF THE ASSESSEE WITH REGARD TO THE GOODS SOLD TO M/S. JAYANTI PREMCHAND WHICH WERE LYING IN THE PREM ISES OF THE ASSESSEE FOR DELIVERY. THE LEARNED CIT(A) ACCORDING LY DIRECTED THE AO TO GIVE BENEFIT OF RS.18 84 034/- OUT OF THE TOTAL ADD ITION AND THEREFORE IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 6 GRANTED RELIEF IN A SUM OF RS.22 54 424/- ON WHICH REVENUE IS IN APPEAL. AS REGARDS THE BALANCE ADDITION OF RS.13 73 210/- IT WAS SUBMITTED BEFORE THE LEARNED CIT(A) THAT THE ENTIRE BUSINESS IS CARRIED OUT BY SHRI MANUBHAI K. AGRAWAL AND ALL INVESTMENT IS TO BE ATT RIBUTED TO HIM ONLY. THE CASH FLOW STATEMENT FURNISHED TO THE AO WHICH W OULD PROVE THAT INVESTMENT IN UNDISCLOSED STOCK IS MADE BY HIM IS O UT OF THE BALANCE AVAILABLE AS PER REVISED CASH FLOW/STATEMENT FILED BY HIM. THE LEARNED CIT(A) HOWEVER DID NO ACCEPT THE CONTENTION OF THE ASSESSEE BECAUSE THERE WAS NO DIRECT NEXUS BETWEEN THE INCOME EARNED BY SHRI MANUBHAI K. AGRAWAL AND THE ASSESSEE COMPANY. SHRI MANUBHAI K. AGRAWAL IS ALSO DOING HIS INDIVIDUAL BUSINESS. THEREFORE NO TELESC OPING BENEFIT COULD BE ALLOWED IN FAVOUR OF THE ASSESSEE BECAUSE TELESCOPI NG BENEFIT CAN BE ALLOWED OUT OF OWN INCOME ONLY AND NOT FROM OTHER I NCOME ENTITY. THIS ADDITION WAS MAINTAINED BY THE LEARNED CIT(A) ON WH ICH THE ASSESSEE IS IN APPEAL. 6. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T CASH FLOW CHART IN THE CASE OF SHRI MANUBHAI K. AGRAWAL IS FILED AND A T PAGE 93 OF THE PAPER BOOK IN HIS CASE ON THE LAST PAGE THE AMOUNT OF RS. 13 73 210/ IS MENTIONED AND IS REDUCED FROM THE CASH FLOW STATEME NT WHICH IS AVAILABLE TO EXPLAIN THE ABOVE ADDITION MAINTAINED BY THE LEARNED CIT(A). HE HAS SUBMITTED THAT IT WOULD DOUBLE THE ADDITION AND SET OFF MAY BE GIVEN IN THE CASE OF THE ASSESSEE IN RESPECT OF THE AMOUNT DISCLOSED IN THE CASH FLOW STATEMENT IN THE CASE OF SHRI MANUBHA I K. AGRAWAL. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO P B -9 TO 11 WHICH ARE THE REPLIES FILED BEFORE THE AO AND SUBMITTED THAT ADDITION OF RS.3 70 000/- WAS RIGHTLY DELETED BY THE LEARNED CI T(A) BECAUSE OF VALUATION DIFFERENCE AND THAT M/S. JAYANTI PREMCHAN D ALSO FILED CONFIRMATION BEFORE THE AUTHORITIES BELOW FOR THE P URPOSE OF 200 BALES FROM THE ASSESSEE COPY OF WHICH IS FILED AT PB-23. IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 7 7. ON THE OTHER HAND THE LEARNED DR RELIED UPON T HE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE M ADE CORRECT STATEMENT AT THE TIME OF SEARCH BUT LATER ON RETRAC TED FROM THE STATEMENT WITHOUT ANY REASON. THE CASE OF SHRI MANUBHAI K. AG RAWAL IS INDEPENDENT WHO WAS ALSO DOING INDEPENDENT BUSINESS AND ACTION IS ALSO TAKEN IN HIS CASE INDEPENDENTLY. THEREFORE NO NEXU S IS PROVED BETWEEN THE EXCESS STOCK LYING IN THE PREMISES OF THE ASSES SEE AND THE CASH FLOW STATEMENT FILED BY SHRI MANUBHAI K. AGRAWAL NE XUS IS PROVED BETWEEN EXCESS STOCK AND THE FUNDS AVAILABLE WITH S HRI MANUBHAI K. AGRAWAL. THE LEARNED DR SUBMITTED THAT IT WAS THE A LTERNATIVE CONTENTION ONLY RAISED FOR THE FIRST TIME BEFORE THE TRIBUNAL WHICH WAS NEVER RAISED BEFORE THE AO AND THE LEARNED CIT(A). THEREFORE SU CH CONTENTION CANNOT BE ALLOWED TO BE RAISED FOR THE FIRST TIME. THE LEA RNED DR SUBMITTED THAT BEFORE THE AO THE ASSESSEE ADMITTED THE DISCREPANCY ON ESTIMATION WHICH CANNOT BE DENIED AT THIS STAGE. THE LEARNED D R SUBMITTED THAT SINCE THE ASSESSEE FAILED TO EXPLAIN THE ADDITION M AINTAINED BY THE LEARNED CIT(A) THEREFORE APPEAL OF THE ASSESSEE W AS RIGHTLY DISMISSED. THE LEARNED DR IN THE DEPARTMENTAL APPEAL RELIED UP ON THE ORDER OF THE AO AND SUBMITTED THAT THE ASSESSEE AGREED FOR THE R ATE IN QUANTITY IN HIS STATEMENT RECORDED U/S 132(4) OF THE IT ACT. ONCE GOODS SOLD TO M/S. JAYANTI PREMCHAND THE GOODS CANNOT BE REDUCED FROM THE STOCK WITHOUT PHYSICALLY REMOVING THE SAME BY THE PURCHASER PARTY . HE HAS SUBMITTED THAT THE AO WAS NEVER INTIMATED ABOUT THE REMOVAL O F THE GOODS AFTER SEARCH. HE HAS SUBMITTED THAT PHYSICAL STOCK WAS VA LUED AT A LESSER VALUE SO NO DIFFERENCE WAS LEFT. THE LEARNED CIT(A ) SHOULD HAVE CONSIDERED THE RATES FOR THE INVENTORY. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL ON RECORD. THE SEARCH PARTY VALUED THE STOCK AND FOUND THAT THE ASSESSEE COMPANY WAS IN POSSESSION OF UNACCOUNTED STOCK OF R S.36 27 634/-. THE STATEMENT OF THE DIRECTOR OF THE ASSESSEE COMPANY W AS RECORDED WHO HAS IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 8 AGREED WITH THE QUANTITY AND THE COST PREPARED BY T HE SEARCH PARTY WITHOUT ANY OBJECTION ACCEPT THE UNDISCLOSED INCOME AND AGREED TO PAY THE TAX. COPY OF THE INVENTORY OF THE STOCK IS FILE D IN THE PAPER BOOK AND THE VALUATION OF THE STOCK BY THE SEARCH PARTY AND VALUATION OF THE STOCK BY THE ASSESSEE IS ATTACHED WITH THE ASSESSMENT ORD ER IN WHICH THE RATES ARE SAME AS ADOPTED BY THE SEARCH PARTY AND THE ASS ESSEE. HOWEVER THE ASSESSEE HAS SHOWN LESSER QUANTITY OF THE STOCK WIT H REGARD TO COTTON COTTON SEEDS AND COTTON BALES. RATES OF THE ITEMS O UT OF 11 ITEMS ARE SAME. IT WOULD THEREFORE PROVE THAT RATES OF THE ITEMS ARE SAME AND THAT THE ASSESSEE COULD NOT EXPLAIN WHY DIFFERENT QUANTI TY HAS BEEN SHOWN. SINCE THE INVENTORY OF THE STOCK IS ACCEPTED WITHOU T ANY OBJECTION BY THE ASSESSEE THEREFORE THERE WAS NO REASON TO DISPUTE THE SAME AT THE LATER STAGE. THE ASSESSEE HOWEVER EXPLAINED BEFORE THE L EARNED CIT(A) WITH REGARD TO THE MISTAKE IN THE VALUATION OF THE STOCK AND THAT VALUATION OF THE STOCK IS TO BE DONE AT THE SAME RATE TO ARRIVE AT THE DIFFERENCE AND BY VALUING THE STOCK ON SUCH BASIS THE VALUATION OF T HE STOCK AS PER THE BOOKS WAS DETERMINED AT RS.2 75 45 946/- AS AGAINST THE VALUATION MADE BY THE AO AT RS.2 71 75 556/-. THE LEARNED CIT (A) WAS THEREFORE JUSTIFIED IN HOLDING THAT THE VALUATION SHALL HAVE TO BE IDENTICAL ON LIKEWISE BASIS. THE LEARNED CIT(A) ON VERIFICATION OF THE RECORDS AND THE RATES NOTED THAT THE RATES ARE VERIFIABLE FROM THE RECORD ITSELF AND ACCORDINGLY RIGHTLY GRANTED BENEFIT TO THE ASSESSE E IN A SUM OF RS.3 70 390/-. NO MATERIAL IS PRODUCED BEFORE US BY THE LEARNED DR TO REBUT THE FINDINGS OF THE LEARNED CIT(A) IN THIS RE GARD. AS NOTED ABOVE THE CHART FILED BY THE ASSESSEE IS ATTACHED WITH TH E ASSESSMENT ORDER IN WHICH LESSER QUANTITY IS SHOWN AS COMPARED WITH THE QUANTITY FOUND AT THE TIME OF SEARCH WOULD SHOW THAT THE ASSESSEE COM PARED THE RATES AS ADOPTED BY THE SEARCH PARTY. IN THE ABSENCE OF ANY ADEQUATE MATERIAL PRODUCED BY THE REVENUE WE DO NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE WITH THE ORDER OF THE LEARNED CIT(A) IN DELETING TH E ADDITION OF RS.3 70 390/-. SIMILARLY THE ASSESSEE EXPLAINED TH AT 200 COTTON BALES IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 9 WERE SOLD TO M/S. JAYANTI PREMCHAND AND INVOICES OF THE PURCHASE WERE PREPARED ON 03-01-2001 AND 05-01-2001 ON 4 OCCASION S BUT DELIVERY HAVE BEEN MADE TO THIS PARTY AFTER THE SEARCH. THE ASSESSEE PRODUCED THE CONFIRMATION OF THE PARTY WHO HAVE CONFIRMED PURCHA SES OF THE BALES FROM THE ASSESSEE AND THE SAID PARTY ALSO PRODUCED THE BOOKS OF ACCOUNT AND SALE AND PURCHASE REGISTERS BEFORE THE LEARNED CIT(A) WHICH REVEALED THAT NOT ONLY 200 BALES WERE SOLD TO THEM BUT OTHER 200 BALES WERE ALSO SOLD ON 03-01-2001 AND 05-01-2001 ON 4 OCCASIONS AN D DELIVERY OF THE SAME HAVE BEEN TAKEN PRIOR TO SEARCH ON 08-01-2001 AND 17-01-2001. SINCE THE PARTY HAS VERIFIED THESE FACTS AND THE CR OSS ENTRIES ARE RECORDED IN THE BOOKS OF ACCOUNT OF M/S. JAYANTI PREMCHAND THEREFORE THERE WAS NO REASON TO DOUBT THE EXPLANATION OF THE ASSESSEE THAT FURTHER BALES WERE SOLD TO M/S. JAYANTI PREMCHAND BUT DELIVERY OF 200 BALES WAS GIVEN ON LATER DATE. SINCE THE ENTIRE MATERIAL IS PRODUCE D BEFORE THE LEARNED CIT(A) AND INSURANCE IS ALSO DONE BY THIS PARTY FOR PURCHASE OF THE GOODS THEREFORE THERE WAS NO REASON TO DISPUTE TH E FINDING OF FACTS RECORDED BY THE LEARNED CIT(A). IT IS SETTLED LAW T HAT EVEN AFTER MAKING ADMISSION OF THE FACT THE ASSESSEE COULD PROVE THA T ADMISSION WAS IN FACT INCORRECT OR WAS NOT BASED UPON CORRECT FACTS. WE ON THE BASIS OF THE EVIDENCES AND MATERIAL ON RECORD AND P ARTICULARLY THE TRANSACTIONS WERE DULY RECORDED IN THE BOOKS OF ACC OUNTS OF M/S. JAYANTI PREMCHAND WHO HAVE ALSO CONFIRMED THE PURCHASE OF T HE BALES FROM THE ASSESSEE DO NOT FIND IT TO BE A FIT CASE FOR IN TERFERENCE IN THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF RS.1 8 84 034/-. WE THEREFORE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE LEARNED CIT(A) IN DELETING BOTH THE ABOVE ADDITIONS. WE ACCORDINGLY CONFIRM THE FINDINGS OF THE LEARNED CIT(A) IN DELETING THE ABOVE ADDITIONS AND DISMISS THE APPEAL OF THE REVENUE. 9. AS REGARDS ASSESSEES APPEAL THE AO RECORDED TH E STATEMENT OF THE ASSESSEE IN THE IMPUGNED ORDER AND AT PAGE 6 OF THE ASSESSMENT ORDER IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 10 THE STATEMENT OF THE ASSESSEE IS RECORDED THAT THE AMOUNT OF RS.13 73 000/- IS THE SMALL AMOUNT AGAINST OVER ALL STOCK OF RS.2 71 75 000/- AND ITS NORMAL DIFFERENCE AND DISC REPANCY IS ON ACCOUNT OF ESTIMATION MADE BY THE SEARCH PARTY. IT WOULD THEREFORE PROVE THAT THE ASSESSEE FAILED TO EXPLAIN THE ADDIT ION OF RS.13 73 210/- BEFORE THE AO. SINCE THE DIRECTOR OF THE ASSESSEE A CCEPTED IN HIS STATEMENT THAT QUANTITY AND COST IS CORRECTLY MENTI ONED IN THE INVENTORY OF THE STOCK BY THE SEARCH PARTY AND THE SAME WAS A CCEPTED WITHOUT ANY OBJECTION THERE WAS NO REASON TO HOLD THAT INVENTO RY OF THE STOCK AND VALUATION OF THE STOCK WAS PREPARED ON ESTIMATE BAS IS. IN THE CHART FILED BY THE ASSESSEE RATES ARE SAME AS COMPARED WITH THE RATES ADOPTED BY THE SEARCH PARTY. IN THE ABSENCE OF ANY EXPLANATION AND EVIDENCE FILED BEFORE THE AO THE AO WAS JUSTIFIED IN MAKING THE A DDITION. THE ASSESSEE HOWEVER AT THE APPELLATE STAGE BEFORE THE LEARNED CIT(A) RAISED ANOTHER PLEA THAT SINCE THE ENTIRE BUSINESS IS CARRIED OUT BY SHRI MANUBHAI K. AGRAWAL THEREFORE EXCESS STOCK AND INVESTMENT THE REIN IS ATTRIBUTABLE TO HIM ONLY AND THE SAME IS ALSO MENTIONED IN HIS CASH FLOW STATEMENT. THE SUBMISSION OF THE ASSESSEE WAS RIGHTLY REJECTED BY THE LEARNED CIT(A) BECAUSE THE ASSESSEE FAILED TO PROVE ANY DIRECT NEX US BETWEEN THE INCOME EARNED BY SHRI MANUBHAI K. AGRAWAL AND THE A SSESSEE COMPANY. THE LEARNED CIT(A) NOTED THAT SHRI MANUBHAI K. AGRA WAL IS DOING INDEPENDENT BUSINESS ALSO. THEREFORE NO TELESCOPIN G BENEFIT COULD BE GIVEN IN RESPECT OF THE CASH FLOW STATEMENT FILED B Y SHRI MANUBHAI K. AGRAWAL WITH THE ADDITION MADE IN THE CASE OF THE ASSESSEE BECAUSE TELESCOPING BENEFIT CAN BE ALLOWED TO THE OWN INCOM E ONLY. WE THEREFORE DO NOT FIND ANY FAULT IN THE FINDINGS OF THE LEARNE D CIT(A). THE LEARNED COUNSEL FOR THE ASSESSEE ALSO REFERRED TO PB-93 I.E . CASH FLOW STATEMENT FROM THE PAPER BOOK FILED IN THE CASE OF SHRI MANUB HAI AGRWAL BUT NO CO-RELATION IS EXPLAINED WITH THE EXCESS STOCK FOUN D WITH THE ASSESSEE. CONSIDERING THE ABOVE DISCUSSIONS AND THE FACT THAT THE ASSESSEE MADE DIFFERENT CONTENTIONS BEFORE THE AO AND BEFORE THE LEARNED CIT(A) AND IT (SS) A NO.69 AND 84/AHD/2004 M/S. AGRAWAL COTSPIN PVT. LTD. 11 NOW AT THE SECOND APPELLATE STAGE THE ASSESSEE SEEK S SET OFF OF INCOME FROM THE CASE OF SHRI MANUBHAI K. AGRAWAL IN THE AL TERNATIVE CONTENTION WE DO NOT FIND IT TO BE A FIT CASE FOR INTERFERENCE IN THE ORDERS OF THE AUTHORITIES BELOW. SINCE THE ASSESSEE FAILED O FILE ANY MATERIAL OR EVIDENCE TO EXPLAIN THE EXCESS STOCK FOUND DURING T HE COURSE OF SEARCH IN ITS POSSESSION THEREFORE WE DO NOT FIND ANY JUSTI FICATION TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) IN MAINTAINING THE ADDITION OF RS.13 73 210/-. ORDER OF THE LEARNED CIT(A) IN THIS REGARD IS ALSO CONFIRMED. 10. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DI SMISSED. 11. NO OTHER POINT IS ARGUED OR PRESSED. 12. IN THE RESULT THE DEPARTMENTAL APPEAL AND THE APPEAL OF THE ASSESSEE BOTH ARE DISMISSED. ORDER PRONOUNCED ON 22-10-2010 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 22-10-2010 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR ITAT AHMEDABAD 6. GUARD FILE BY ORDER DY. REGISTRAR ITAT AHMEDABAD