9911796707
TMI Blog2012 (2) TMI 677X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 1,42,84,106/-. The Assessing Officer observed that at the time of search in the case of Anant Steels, the assessee has agreed to surrendered an amount of ₹ 89,61,911/- under the following heads of income :- S.No. Description of Head Anant Steels P.Ltd. 1. Excess Stock 37,94,670 2. Loose papers found 42,67,241 3. Payment made out of book 9,00,000 4. At the time of search in case of Shivangi Estates, the assessee has agreed to surrender an amount of ₹ 57,23,421/- under the following heads of income :- S.No. Description of Head Shivangi Estates Limited 1. Excess stock 2490662 2. Loose papers found 32,32,759 3. Payment made out of book Nil 57,23,421 5. With regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 911 5723421 1468532 2.2] That as far as declaration in respect of Loose papers and Payment made out of Books of ₹ 75,00,000/- and ₹ 9,00,000/-are concerned, both these amount included in the amount of excess stock found at the time of search. The assessee on precautionary measure on ad hoc basis and to avoid harassment has ready to pay tax on the amount of addition income of ₹ 1.46 Crores which includes excess stock, loose papers and Payment made out of books of account. 2.3] That loose papers though dumb in nature but what so ever there nature, considered in the amount of excess stock found. 2.4.1]It is very well settled principle that in search proceeding one can be taxed in respect of the difference of the amount of assets found and that was disclosed by the assessee. 2.4.2] That payment made out of books towards purchase of goods duly considered in the amount of excess stock found. Hence, no separate addition is justified. The assessee has not claimed credit of unpaid stock. Hence, no separate addition is justified on account of payment made out of book. For this reason only the said amount of ₹ 9,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer inferred that the assessee company up to 15/11/2006 or in the 220 days the company had issued 1284 invoices which has not been entered in the regular books of the assessee company. By taking average weight of 16.000 M.Tons by considering the rate of ₹ 20,750/-, the amount of unrecorded sales was calculated at ₹ 42,62,88,000/-(l6.000 M.Tons * 220 days = 20544 @ ₹ 20750/-), for 340 days it will be ₹ 65,88,08,727/- (426288000/220X340) in the hands of Anant Steels Pvt Ltd. Similarly, in the case of Shivangi Estates Ltd Invoice No 1399 on 18/11/2006 found and seized from the premises of New Sardar Steels for 22.680 M. Ton of iron bars. The Assessing Officer stated that this invoice has not been accounted for by the assessee company, as separate invoice of same numbers has been issued to other party which was accounted for in the books of account. This means up to 18/11/2006 or in the 223 days the company had issued 1399 invoices which did not enter in the sales of the assessee company. From this inference can be drawn that the assessee company issued parallel invoices up to 1399 and by taking average weight of 21.000 M.Tons by considering the rate of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crore Eighty Lacs only) on account of loans advances and interest on such advances of Rs . 8,lO,O00/- ( Rupees Eight Lacs Ten Thousand only) totaling to ₹ 1,88,00,0001- ( Rupees One Crore Eighty Eight Lacs Ten Thousand only) . 12. Details of total amount of income declared vis-a-vis assets found in possession of the assessee and details of Income surrendered in the hand of the Individual family members and by the assessee and MIs Shiivangi Estate Limited was stated to be as under:- S.No Name of the Persons Amount Remarks 1 Dr R.K. Bansal 1,80,00,000 On account of advances 8,10,000 On account of Interest on advances 2 Mohan Kumar Bansal 1,50,00,000 On account of advances 6,75,000 On account of interest on advances 35,00,000 On account of Investment in the house ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the AO per this office letter dated 25.,11.09 specially in the matter of verification of appellant's contention about issues of sizeable number, sale bills for factual consumption and the matter of contentions of GP rate adopted by the AO. The AO submitted his report in the matter of verification per report dated 17.12.09 enclosed with appeal order as Annexure A. The copy of such report was made available to the appellant and appellant further submitted written submission duly supported by the copy of statement of Shri Pankaj Bansal, Director of both the assessee companies. 4. By the impugned order, the ld. CIT(A) deleted the addition after having the following observations :- Facts on record, findings given by the Assessing Officer in assessment order as well remand report after verification of facts and the contentions put forward by the appellant are carefully examined. 4.1 The AR present in course of appeal proceedings in discussion over and above the written submissions filed emphasized on the following points:- The duplicate bill no.1399 of M/s. Shivangi Estates Ltd., as well bill no.1284 of Anant Steel Pvt. Ltd., were not found from the premises of eithe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment order. It was also stressed that such working of GP was also misconceived in so much as in working out such GP rate, other income has been taken into consideration and if the same was excluded there would be negative / nil GP and the excess stock found has already been declared by the appellant even in excess of the amount accepted in search and seizure operation and no other unrecorded assets or investment belonging to the appellant company were detected in search and seizure operation. 4.2 The AO has approached the issue of estimation of unaccounted sales from two angles. One is based on the duplicate bills found i.e. parallel unaccounted billing where unaccounted sales have been estimated on the basis of recorded sales. This approach has been contested on factual grounds by the appellant and the AO's remand report has been obtained as already discussed in detail above. 4.2.1 Secondly, the AO has approached the issue of unaccounted sales based on 4 loose papers found from the premises of Dr. R.K. Bansal, listed as LPS-2, the broad description of which is extracted on page 4 of the assessment order as part of assessee's submissions, where the total receipts as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, which are nearly thrice the turnover of both the appellant companies taken together. 4.3.1 There is apparently merit in the assessee s contention in as far as estimation of sales based on certain loose papers which are hardly numbering 10 including the other papers referred by Assessing Officer. The transactions recorded in such loose paper appear to be in the nature of summary of transactions and there are no indication whatsoever to draw the inference that these were summary of cash receipts and payments of a single day as neither opening balance are indicated in the papers nor closing balance have been drawn. The Assessing Officer could have definitely drawn some support to his finding about parallel unrecorded transaction from the various details appearing in such loose papers and should have very well carried out further verification in the matter of entries appearing on such loose papers vis-a-vis other records. But the approach adopted by AO as treating such receipts and payments as transactions of a single day and thereby arriving at average receipts in a single day at Rs,48.36 lakhs cannot be said to be supported by facts on record and justified in any manner. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted hereunder: That till sale Bill no. 1284 issued till date of search includes 924 sale bill related to the actual sale and balance 360 sale bill issued for factory consumption. If the said sale bill multiplied with the actual quantity and actual sale price, the amount of unrecorded sales calculated comes to ₹ 23,22,24,588/-. Calculated as under: Sale Bill issued till sale Bill No. 1284 924 Actual average quantity of goods sold 12,768 M.T.. Total quantity 11,797.632 M.T. Averages sale rate 19,684/- per M. T. Total sales 23,22,24,588/- Average rate of G.P. Negative Unaccounted income NIL 4.4.2 Proceeding further, even on factual part the estimate of unaccounted sales upto the date of search comes to ₹ 22.03 crores in the case of Shivangi and in the case of Anant Steel Ltd at ₹ 23.22 crores i.e, ₹ 45.25 cr as against total unaccounted sales estimated by AO for both the concerns u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant's record would be obviously negative. 4.5.1 Now the question arises when the appellant's records are found to be unreliable and it is held that the appellant was indulging in unrecorded transaction leading to disclosure of additional income for excess stock found in the hands of the company itself besides amount declared for loose papers, the GP rate and NP rate declared as per records cannot be attached much significance and cannot be held to be the correct NP rate to be adopted for the purpose of determining profits on unrecorded transactions. 4.5.2 Proceeding further, considering the GP rate worked out by the AO including other income at 3.40% in case of M/s. Anant Steel Pvt. Ltd., and 3.14% in the case of Shivangi Estate Ltd., reasonable rate of NP cannot be in any way than 3% at the maximum and even if that amount of additional income at ₹ 147.03 lakhs for excess stock found. The Assessing Officer has been fair enough to grant set-off of profit determined on unrecorded sales against such additional income declared being excess stock. Hence, in view of the findings arrived above, where the NP on such unrecorded transactions have been arrived at Rs.!35.7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only made addition on account of excess stock, loose paper etc, but also made addition by estimating the sales on the basis of two bills found at the premises of M/s. New Sardar Steels. The Assessing Officer observed that Bill No.1284 dated 15.11.2006 of 176.070 M.T of Anant Steels Private Limited issued in the name of New Sardar Steel found at the premises of New Sardar Steels. Similarly bill no. 1399 dated 18.11.2006 of 22.608 M. T. of Shivangi Estates Limited issued in the name of New Sardar Steels found and seized from the premises of New Sardar Steels. On the basis of these two bills, the Assessing Officer presumed that the assessee had contained parallel invoicing, he, therefore, proceeded to estimate turnover for whole years on the basis of these two bills. On hypothetical basis, the Assessing Officer computed sale of whole year on the basis of these two bills in the case of both the concerns. The Assessing Officer also found that gross profit rate of M/s. Anant Steels on the basis of financial figures of the year 2006-07 works out to be 3.40 % and in case of Shivangi Estates Limited 3.14 %. By disregarding the actual gross profit rate which was even worked out by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inference that these were summary of the cash receipts and payment of a single day as neither opening balance are indicated in the paper nor closing balance have been drawn. The CIT(A) observed that approach of the Assessing Officer for treating such receipts and payments as transaction of a single day and that by arriving at an average receipt in a single day at ₹ 48.36 lakhs cannot be said to be supported by facts on record and justified in any manner. As per the CIT(A), the Assessing Officer should have computed sale on the basis of actual bills found rather than applying extrapolation of such figure to the entire year. By observing that the assessee has owned up huge unaccounted stocks and other income to the tune of ₹ 1.75 crores in the hands of these two companies besides further amounts of ₹ 3.65 crores in the hands of Directors, no separate additions were warranted. 15. On the basis of remand report and the factual position as verified by the Assessing Officer in respect of quantity of unrecorded sales to the date of search as per the working given by the assessee, the CIT(A) found that after excluding the other income and applying average gross profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of each of the concern and the sale value per M. T. in respect of each of the concerns. As per the remand report, precise figure/quantity of the details discussed above are as under :- S.No. Particulars Anant Steels P. Ltd. Shivangi Estate Limited 1. Total Sale bill issued 1315 1409 2. Bills related to the Factory consumption 363 315 3. Bills actually issued for sale 952 1094 4. Qty. related to the goods sold 12155.740 12582.090 5. Qty. per Bill 12.768 11.500 6. Sale Value 239271457 223012704 7. Sale Value per M. Ton 19684 17725 17. We have verified the remand report and found that unaccounted sales on the basis of figures so me ..... 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