9911796707
TMI Blog2015 (6) TMI 676X X X X Extracts X X X X X X X X Extracts X X X X ..... fective or not properly maintained in this year also. The principles of res judicata will not apply in such matters. Had it been so, then in assessee’s own case, for the assessment years 2009-10 8,30,742/-, as submitted by the CIT(A) is deleted. - Decided in favour of assessee Addition u/s 69A - Held that:- Cash was found from the residence of the Director Jasvinder Bajaj, wherein a sum of 7,34,000/- was found and 39,500/- was found from another Director, Shri Swaranjit Bajaj. At the time of search, it was claimed that there was cash in hand in the names of various persons including that of the assessee company, which aggregated at 32,72,780/-. The reply of the assessee as filed before the AO has not been properly rebutted or examined. Further, from the statement of cash balance of various persons, it is seen that, the availability of cash as per their books maintained and claimed by the assessee appears to be correct. In all the personal Balance-sheets and cash balance as appearing in the cash-book belonging to the family members of the Directors and Director themselves sufficient cash was available, therefore, under these circumstances same cannot be added in the hands of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out not only on the business premises of the assessee, but also on residential premises of the Directors and family members. During the course of search & seizure and survey operation conducted by the Investigation Wing, statements of various persons including Directors and employees were recorded and certain papers/documents were also seized. In pursuance of such search and seizure action, notices u/s 153A were sent and assessments were completed for the AYs 2006-07 and 2007-08, wherein the main addition was made on the ground that the sale of milk products have been camouflaged as sale of milk to reduce the tax liability, after rejecting the books of accounts u/s 145(3). The said Srejection of books of accounts and estimation of income has been upheld upto the stage of the Tribunal in the second appeal for aforesaid assessment years. For the impugned assessment year the proceedings u/s 143(3) was initiated as this was the year of search and, therefore, the assessment proceedings was commenced under normal provisions of the Act, i.e. u/s 143(3). The starting point of the AO as stated in the assessment order was that the gross profit shown by the assessee in the relevant a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh these outlets, however, there is no sale of milk from these retail outlets. In response to the show cause notice that the assessee does not deal in sale of milk as found during the course of search, the assessee submitted that its main business is in 'milk' and 'milk products' and the information gathered by the search party was based on statement given by some of the staffs, upon which Directors have already clarified that it is not correct. It was further stated that, trading in milk and income generated from sale of milk has always been offered in the return of income also. This was further clarified vide letter dated 16.11.2009, which has been reproduced by the AO in para 6.3 and further elaborated in the reply given vide letter dated 07.12.2009, which too has been reproduced by the AO in para 7.1. 4. However, the Ld. AO, rejected the assessee's contention on the ground that no paper or sale voucher for sale of milk was found during the course of survey at the company's premises or at its various outlets and also the books of accounts and vouchers were not produced before the Investigation Wing. Further, the Director in his statement recorded on 09.05.2007, himself has st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milk products are sold on those counters and no milk was sold. During the assessment proceedings, the Assessing Officer has again called for quantitative details of sale of milk with documentary evidence. However no documentary evidence was submitted before the Assessing Officer inspite of specific enquires were made from time to time. Neither the books of account, nor bill vouchers etc. were produced to substantiate its claim that milk was sold as claimed in the books of accounts. Since the director of the company has admitted that no quantitative details have been maintained and no inward and outward registers and consumption and production register has been maintained, therefore, it was a sufficient ground before the Assessing Officer to reject the books of accounts of the Assessee". 4.10 The second issue is regarding the estimation of profit of the business. To compute the profit the Assessing Officer has adopted the difference of Gross Profit between the milk sale and sale of remaining items gross profit and computed the Gross Profit @ 16.31% of ₹ 50,93,449/-. Since the appellant has failed to submit the required details before the Assessing Officer during the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has decided the issue of rejection of books of accounts and estimation of net profit rate against the assessee. However, the said finding will not act as a res judicata and will not be applicable in the impugned assessment year for the reason that, in the matter of rejection of books of accounts, the AO should not be influenced by the decision arrived in the past assessment as each assessment year is a separate and distinct and the facts of each year needs to be examined to see the book results. The assessee, in this year has not only produced the entire books of accounts and details but also the stock register, which gives the complete detail of purchase of milk, milk processed for milk products, consumption of milk products and sale of milk not only quantity-wise but also valuewise. Instead of examining these details or carrying out any enquiry from the customers, whose names and details were given before the AO to whom the milk was sold and payments were received through account payee cheques, he has relied upon the uncorroborated statements of the employees and that no details were produced before the authorized officers. The entire reasoning of the AO for rejecting the books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in the assessment year 2009-10 and 2010-11, the assessment in the case of the assessee have been completed under scrutiny proceedings and order u/s 143(3) have been passed, wherein, not only the sale of milk but also the book results shown in the regular books of accounts have been accepted. The copy of the assessment orders for the AY 2009-10 & 2010-11 was filed by him. 8. On the other hand ld. CIT DR, submitted that once the Tribunal on the same issue has decided the matter and without there being any change in the facts and circumstances, the said decision should be followed or else the matter should be referred to a larger bench. In support of this proposition, he strongly relied upon the ITAT Mumbai SB decision in the case of DCIT vs Summit Securities Ltd reported in [2011] 132 ITD 1. On merits, he submitted that the findings of the AO as well as ld. CIT(A), is categorical that the quantitative detail of sale of milk and documentary evidences were filed inspite of query raised from time to time. Based on these facts ITAT has confirmed the rejection of book results. Neither the books of account nor the bill/vouchers etc. were produced before the authorized officers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur query regarding the statements made by the staff that they have not sold the milk is wrong in nature as you have collaborated the statement from one unit of one person without ascertaining the facts from other outlets. Moreover, the nature of selling the milk is also different as small consumable packets are sold at the outlets, moreover bulk quantities are sold directly wherein our supplier is directly instructed to deliver the milk to our purchaser. It is a kind of agent in the deal. Further, we wish to state that we have already furnish the details in our earlier letter dated 06.10.2009. Further, I would like to state that I myself, my brother and my wife have shown trading in milk and the income generated in trading in milk is offered in the respective return of income". Thereafter, the assessee, again, vide reply dated 07.12.2009, submitted that some of the bulk sale of milk has been done to various established parties from whom payment has been received through account payee cheques. For the relevant financial year 2007-08, the assessee had given the following details in its reply before AO: "In the financial year 2007-08 sale milk has been executed in the name of Asian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted. I prepare this sheet on daily working basis. The shop is open for all days in a week from 8.30 a.m. to 9.30 p.m. There is only counter sales and there is no home delivery, hotel delivery". The aforesaid clarification and the statement have not been rebutted by the AO with any material facts or evidence on record and have been rejected simply on the ground that some of the employees have denied the sale. 13. From the records and the replies filed before the AO, it is seen that the assessee had filed the entire statement of purchase and sale of milk products and milk showing day-to-day purchase of milk, sale of milk and the products manufactured. All these details have neither been examined nor have been commented upon either by the AO or by the CIT(A). So far as the Director's statement, the one part of the statement states that quantitative details of purchase of milk and quantitative details of sales would be given which later on had been duly complied with, which is evident from the statement of purchase and sales appearing in the paper book Volume-I page 46 to 105; and further the second part, regarding maintenance of various registers, the same too have been clarified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k sold is 560 liters on 04.04.2007 and 481 liters on 30th April, 2007. Similarly, in the month of May 2007, there is only one instance of milk which was sold on 05.05.2009. From the month of June onwards, the milk has been sold almost every day, though, quantity sold is far less than the quantity of milk used for own consumption for production of various milk products. These purchases and sales are also corroborated by the invoices raised by the assessee. It is further seen that majority of the milk purchased are either under process or have been used for manufacture of milk products for which there is no dispute either by the AO or by the CIT(A). The only allegation of the Department is that there is no sale of milk by the assessee. Such an allegation of the AO cannot be sustained, firstly, for the reason that the sale of milk has been duly shown in the books of account, which have been maintained on regular basis and the relevant entry of sale of milk is duly corroborated by invoices of purchase and sale. Secondly, the bulk of the milk sold is evidenced by the invoices which have been sold on credit and payment has been received through account payee cheques. The details of which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e maintenance of books of account and the nature of details before the AO, are also reproduced hereunder: "Letter dated 5th November, 2009 please note that as per your earlier questionnaire a question was put up whether the inventories are maintained in which we had specified the inventories are maintained and inward and outward register is maintained, we hope our answer to this subject shall not be misunderstood as we maintain the rough sheets of production records daily but are being disposed after entering properly and we have already submitted stock item register and stock journal register for financial year 2007-08 which was duly submitted to your good self during our earlier proceedings and moreover we state that registers for financial year 2006-07 has been checked and verified from your side and further assistance or requirements shall be submitted on hearing from you. Stock summary for the years 2005-06, 2006-07 and 2007-08 are hereby attached for your kind perusal letter dated 10th November, 2009 "Moreover, we are hereby also submitting the item wise monthly summary of sales and purchase copies for the F.Y. 2005-06 Pages Nos. 7 to 58." Letter dated 19th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statement but defining the statement more clearly, "Sir we have never denied the sale of milk and made it clear to the concerned officer that sale or supply of milk is done in the early hours prior to the opening of the shop and the boys or the staff was paid the incentive directly who executed the supply, and the accounts for the same was not collaborated with the sales from the outlet but directly from the source i.e. from the factory and the pattern adopted for accounting purpose is not known to s as we paid the cash directly to the factory" which may have been misinterpreted during the course of investigation. It seem that you have already come to a conclusion that the sale of milk is not in existence and all the same amount should be added as undisclosed cash, which is untrue from the facts submitted and evidences provided, moreover the law can be interpreted either ways, the conclusion derived will have an adverse result on the findings thus the truth will be left on the horizons, which is absurd, false and imaginary, also the purchase of milk is all legally done through the recognized parties and the payments for the same have been made by cheque and if purchase is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady extracted the finding of the AO as well as the CIT (A) in the preceding paragraphs of this order. So far as, we have not only upheld the validity of the search assessment but also confirmed the act of rejection of books of accounts. Once the books of accounts are rejected under the provisions of section 145(3) of the Act, „best judgment' assessment becomes a follow up activity of the AO. In this case, AO has made certain errors while making additions which are subsequently corrected by the CIT (A), determining the GP at 23.23%. 14. This is a case where allegation of use of milk for dairy products was not substantiated, by the fact that there is no sale of milk as evidenced by way of filing bills. The AO / CIT (A) have categorically stated that the assessee failed to submit the details in support of the sale of milk to the tune of 12,15,244/-. Thus, the said assessee's failure clubbed with the statements of the employees given on oath became relevant. The arguments relating to the retraction of the said statements by the employees are not sustainable considering the fact that the retraction was done in undated letters without giving sustainable reasons for such retracti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efective or not properly maintained in this year also. The principles of res judicata will not apply in such matters. Had it been so, then in assessee's own case, for the assessment years 2009-10 & 2010-11, the department has not only accepted the books of account and book result but also its income from sale of milk. If in the subsequent year, the factum of sale of milk have been accepted then with the same logic, the finding of the assessment year 2006-07 and 2007-08 that there is no sale of milk, cannot be held to be applicable in the impugned assessment year, i.e. A.Y. 2008-09. Each year have to be examined independently based on facts and materials on record, because, the matter pertaining to rejection of books of accounts are factual issues, which need to be examined every year. Thus, in view of our above finding, we hold that books of account and the book result, as shown by the assessee should be accepted and consequentially the estimation of the undisclosed income of ₹ 8,30,742/-, as submitted by the CIT(A) is deleted. 18. Coming to the next issue, i.e. addition of ₹ 8,73,500/- u/s 69A, the AO had noted that, during the course of search action at the residence ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d seven hundred eighty only) all the relevant details are enclosed in (page no. 47 to 51) which gives complete details regarding the cash in hand. On the date of search, cash found by the department was ₹ 2,73,500/- & out of which cash amounting to ₹ 7,34,000/- was seized by the department. On my explanation at the time of search, that all the cash found during the search is our accounted money and same is duly reflected in the cash with them. I hereby request your good self to kindly return the cash seized, along with the interest thereon, I hope that the above explanation is best to your satisfaction". 20. He further pointed out that the books of accounts of the Director, Jasvinder Bajaj and others have been accepted, which shows the cash balance of ₹ 39,058/-, and ₹ 1,92,460/- on the date of search itself. Further in the hands of the ladies of the family also, cash balance of ₹ 2,68,095/- were also tallied with their books of accounts. Thus, the total cash balance of ₹ 7,44,511/- were found to be accepted in the books of accounts. In such a case, no addition of unaccounted cash can be made in the hands of the assessee. 21. On the other hand ..... X X X X Extracts X X X X X X X X Extracts X X X X
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