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TMI Blog2015 (10) TMI 1084X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Therefore, under such facts and circumstances prevailing in this year, the finding of the Tribunal in the earlier years will not apply in the impugned assessment year. Otherwise also, if the assessee's books of accounts were not found properly maintained in the earlier years then, it cannot be ipso facto presumed that the books of accounts are defective 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 b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee are as under: 3. On the facts and in the circumstances and in law, the learned CIT(A) erred in rejecting the books of accounts u/s 145(3) of the I.T. Act, although no defects were discovered at the time of Assessment proceedings. 4. On the facts and in the circumstances and in law, the learned CIT(A) erred in confirming the addition made of ₹ 8,30,742/- as estimated undisclosed income on irrelevant and consequential grounds. 5. On the facts and in the circumstances and in law, the learned CIT(A) erred in confirming the action of the Assessing Officer in making the addition of ₹ 8,73,500/- u/s 69A of the I.T. Act, although the source of investment was properly explained. 6. On the facts and in the circumstances and in law, the interest charged u/s 234A, 234B, and 234C of the I.T Act, 1961 are invalid and bad in law . 3. Brief facts of the case qua the issue raised in ground no. 3 4 are that, the assessee is a company incorporated on 31st March, 2005 with main object of carrying on the business of manufacturers and traders in all kinds of dairy/Milk products through various retail outlets and its business premises. A survey operations w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtify if such registers are maintained and, if so, please produce the same? Ans: It is very difficult to maintain such registers and so I do not maintain such registers. Q. No. 10: Please give details of all your dairy products and since your principal raw material is milk, please give details of yield ratio of each products vis- -vis 1 liter of milk? Ans: We make all dairy products i.e. paneer, cream, mawa, ghee, Lassi and butter milk, shrikhand etc. The yielding ratio cannot be ascertained as the clarifications of these have been stated in earlier answers. Q.No. 11: Please submit the quantitative details of purchase of milk in liter of AY 2006-07 and 2007-08 along with quantitative details of all your products in liter/kgms. Ans: I shall submit the details of purchase of milk at the earliest. I shall submit the sales register details at the earliest. Q.No. 12: It is once again requested that you should provide quantitative details of milk and quantitative details of sales? Ans: We shall provide you all the details and prior to that we shall show you all the registers and we shall give you details on your guidance . AO, further noted that assessee has sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the details of milk purchase, quantity of milk converted into various milk products and quantity of milk directly sold was duly produced during the course of assessment proceedings. The day-to-day details of milk purchase, quantity of milk product produced and the milk sold was also filed before the CIT(A). The assessee's submissions in this regard have been incorporated at pages 6 to 8 of the Appellate Order. However, the Ld. CIT(A), confirmed the action of the AO after observing and holding as under: 4.5 I have considered the submissions of the appellant, assessment order of the Assessing Officer and facts of the case carefully. It is noticed that the Appellant company is engaged in the business of sale of milk and milk products. During the course of Search and Survey operation no bills vouchers etc. were found and seized to prove that the assessee is selling milk as claimed in the books as claimed in the books of accounts. The books of Accounts were also not found during the search and never produced before Investigation wing. Statement of Shri Jaswinder Singh Bajaj director of the company was also recorded who has promised to submit the statement of sale and pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord that bulk of the sale of the milk was done through cheques and was sold to parties like, Asian Chemist, Godrej Nature Basket, Nandu distributors, etc. All these details and explanations were submitted by the assessee vide reply dated 07.10.2009. Not only that, the complete movement analysis of milk was also filed during the course of assessment proceedings. Even from the statement of the employees, it does not conclusively imply that milk has not sold because the bulk of the milk is sold directly through factory. In fact, it was clarified that the sale of milk has never been denied by the Directors or the Manager Sales. It was made clear to the concerned authority that sale of milk is done in the early hours of the morning from the factory premises itself, prior to the opening of the shop. In support, he referred to the reply filed by the assessee before the AO. These averments of the assessee have not been properly rebutted either by the AO or by the CIT (A). He further submitted that a detailed statement of purchase and sale of milk and milk products for the financial year 2007-08 was filed before the AO as well as CIT (A), the copy of which is appearing form pages 46 to 105 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equent Bench of the Tribunal finds that the facts and material on record and argument based on such material has not been given due consideration, then the Bench can reverse its earlier decision if the material facts point out that the earlier decision cannot be followed being contrary to the facts on record. In any case, he submitted that, in this year, the matter needs to be verified and examined afresh in the light of the documents and material available on record. 7. During the course of the hearing, this Bench required the Ld. Counsel to show the nature of books of accounts maintained and also the Stock Register for the period 1st April, 2007 to 31st March, 2008 and also for the period subsequent to the search i.e. assessment years 2009-10 2010-11. In response, the assessee had furnished the details of stock register as maintained in 'tally', which gives the details of opening balance, purchase of milk, milk processed for milk products, consumption of milk products, sale of milk and closing balance. These details have been maintained on day-to-day basis, wherein quantity-wise and value-wise details have been given. The stock register itself shows the veracity of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, estimation of income is justified. First of all, we have to see what are the materials before the AO and the finding given by the authorities below for rejecting the books of account. From the order of the AO it is seen that the AO has referred to a statement of one of the Directors recorded u/s 131 on 09.05.2007, wherein, he was asked, whether the assessee company is having any inward register, production/consumption register and also the outward register. In response, it has been stated that it is very difficult to maintain such register; Secondly, he was asked to provide quantitative details of milk and the quantitative details of products sold to which it was stated that the same shall be provided after some time. The AO has also referred to the extract of certain statements of the salesmen, who have denied any sale of milk from the outlets where they were working. Similarly, some of the other employees'/salesmen have reiterated the same that milk is not sold from the retail shops. From these materials, the AO had come to the conclusion that assessee has shown bogus sale of milk in its book in order to suppress the production of other milk products, which have a higher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale has been duly accounted for. Assessee's detailed submission has been even reproduced at page 5 of the assessment order. Though, some of the employee's at the outlets have denied the sale of milk, however, the Manager, Shri Balwinder Singh Bajaj who looks after the sale, in his statement before the authorized officer vide question No. 4 had stated as under: Q. No. 4 of the statement is as under: Q. No. 4: What is your modus operandi of working for purchase and sales of the products and maintenance of records at your sales counter? Ans: Daily morning I open the shop with the help of my attendant. From the main shop located nearby at Punjab Sind Panner Centre, 622, Durga Niwas, KharPali Road, Khar (W), Mumbai -52, I received on an average on daily basis 20 kgs of Paneer for my sales counter. The manager at the Durga Niwas shop delivered me Paneer with a small sheet of white paper on which the weight is written on it. In a whole day, I sell the product at my counter as a retail as per requirement of the customer say 100 gms., 250 gms., 500 gms. Etc. at the rate of ₹ 170/- per kg. At the end of the day while closing, I submit the cash and the balance paneer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills or vouchers were filed before the AO appears to be incorrect and contrary to the record and submissions filed before him, which is further evident from the replies filed before the AO and also the statement of purchase and sales filed before the AO. Such a sweeping statement of CIT(A) is not only uncorroborated but also divorced from the facts on record. 14. At the time of hearing, this Bench had asked the Ld. Counsel of the assessee to produce the stock register and kinds of details, which are being maintained by the assessee for recording the day-to-day purchase and sales of milk and various milk products. As per the direction, the Counsel has filed the print-out of stock register, which has been maintained in tally and also the relevant purchase and sale invoices on sample basis. From the perusal of the stock register, which has been maintained on day-to-day basis, it is seen that assessee has recorded the date-wise opening balance of the milk; purchases made during the day; milk processed for milk products i.e. in the pipelines and machines; consumption for milk products; sales of milk and closing stock. All these details have been maintained on quantitative-wise and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly on the mezzanine floor at the registered office . Q. 8 Who maintains the books of accounts and upto what date are they maintained? Ans: The books of accounts are updated upto 31.03.2007 and are maintained by our accountant, Mrs. Varsha and also by Mr. Gupta both of whom was not present in the premises today . Q. 9 What about books of accounts of the current financial year? Ans: The books of accounts are written on monthly basis on the basis of monthly paper pertaining to purchase and sales, paper of which have been sent to Khar for being checked by Mr. Jaswinder Singh Bajaj Computerized entries are, therefore, not being seen on computer at this premises as the papers are sent to Khar. Q. 11 What are the daily reports of production and dispatch, stock and sales for the current financial year maintained? Please produce the same. Ans: I am producing the respective papers for the current F.Y. The same are as per inventory in Annexure A. Q. 22 Do you want to say anything else? Ans: The accounts are regularly maintained in normal practice but to year-end finalization and the absence of the Accountant being on leave, the accounts of April 2007 to date, could n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Punjab Sweet Farsan the amount for the same was received by cheque, which is duly reflected in the books of accounts. The complete movement analysis of milk is also attached which is evident that there are also parties to whom cash sale is made, hence cash sale of milk cannot be dropped out rightly. In the financial year 2006-07 sale of milk has been executed in the name of Amritpal Singh Nanda, Kay Bee Export Punjab Sweet Farsan the amount for the same was received by cheque, which is duly reflected in the books of accounts. The complete movement analysis of milk is also attached which is evident that there are also parties to whom cash sale is made, hence cash sale of milk cannot be dropped out rightly. In the financial year 2007-08 sale of milk has been executed in the name of Asian Chemist Prop., Godrej Natures Basket - Kandivli, Kailash Parbat, Nanda Distributors, R. K. Shashank Dairy the amount for the same was received by cheque, which is duly reflected in the books of accounts. The complete movement analysis of milk is also attached which is evident that there are also parties to whom cash sale is made, hence cash sale of milk cannot be dropped out rightl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h books of account or details, he could reject the book results and make estimation of income under best judgment assessment. Simply relying upon the statements at the time of survey and non production of registers at that time cannot be the conclusive finding of fact, albeit can be the starting point of show cause and inquiry and then onus is heavily upon the assessee to controvert such information or material. Here in this case as discussed above, assessee has been able to controvert and substantiate the claim of sale of milk. Thus, the reasons given by the AO as well as CIT(A) for disturbing the book results is rejected and we hold that the assessee's books of accounts and book results are liable to be accepted. 15. Now, coming to the decision of the Tribunal for the AYs 2006-07 2007-08, we find that the Tribunal has decided the issue against the assessee, after observing and holding as under: 12. We have heard both the parties and perused the orders of the Revenue Authorities as well as the relevant material placed before us. Admittedly, this is the case where the books pertaining to the production, issuance, consumption are not maintained by the assessee. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account are non-existent in this year, as we have already stated above that the books of accounts along with the register, which gives the entire details of day-to-day purchase, production/consumption and sales have been not only maintained but were also filed before the AO as well as CIT(A). Another reason for justifying the application of estimation of GP rate by the Tribunal, was that the assessee has failed to submit detail in respect of sale of milk to the tune of ₹ 12,54,254/-. Here, in this year, there is no such material that assessee has failed to submit any details in support of sale of milk. On the contrary, the assessee had stated before the AO as well as CIT(A) that bulk sale have been made through account payee cheques and secondly, day-to-day sales have been recorded, were also produced before the AO. No specific defect or discrepancy has been highlighted by the AO nor any enquiry has been made. Further, we have also called for the records and books of account of the assessee to see the nature of entry and recording of transactions. Therefore, under such facts and circumstances prevailing in this year, the finding of the Tribunal in the earlier years w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered in the hands of the Directors and the other family members. Since the search was conducted on the entire group and all the family members of the Directors therefore, cash held by the each family member will have to be taken into consideration and no addition can be made in the hands of the company. He further submitted that, this was specifically pointed out before the AO vide letter dated 7th December, 2009 wherein the assessee gave the details of cash in hand held by each individual and the company, which aggregated to ₹ 32,72,780/-. The relevant extract of the letter is as under: C) As per your questioner regarding the cash of ₹ 8,34,000/- + ₹ 39500/- from Swaranjit Singh Bajaj found during the search as mentioned in your Annexure 2 B 1. Please note that the search was on the entire group/family hence we are providing you details as per the cash in hand held by each individual the company on the date of search i.e. 8/5/07 is as under: Jasvinder Singh Bajaj, the total cash in hand was ₹ 39058/- Swaranjit Singh Bajaj, the total cash in hand was ₹ 190460/- Bhupenderkaur Bajaj, the total cash in hand was ₹ 268095/- Gurpreetk ..... X X X X Extracts X X X X X X X X Extracts X X X X
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