TaxTMI 
TaxTMI 
2015 (6) TMI 676
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....d in law, the learned CIT(A) erred in confirming the addition made of Rs. 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 Rs. 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 were conducted on 8th March, 2007 u/s 133A, on the business premises and retail outlets which was converted into search u/s 132(1) on the same date. The search and seizure operation was carried out not only on the business premises of the assessee, but also on residential premises of the Directors and family m....
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....tio of each products vis-à-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 outlets at various places (as per the details noted by him at page 4 of the assessment order) and stated that assessee buys milk and manufactures various dairy products, which are sold through these outlets, however, there is no sale of milk from these retail outlets. In response to the show ca....
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....'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 purchase of milk and admitted that no inward register, production/consumption register and outward register has been maintained by the company. The statement of salesmen at six other placed was also recorded who have stated that only milk products are sold on those counters and no milk was sold. During the assessment proceedings, the As....
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....sment 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 of the paper book. The said details are also duly recorded in the books of accounts, which are not only audited but were also produced before the AO. He fairly admitted that in the assessment years 2006-07 and 2007-08, the Tribunal has decided the issue of rejection of books of accounts and estimation of net profit rate against the assessee. H....
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....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 the purchase, consumption, production and sale. The copy of register/stock register for the financial year 2007-08 has been kept on record. Lastly, Mr Lalkaka submitted that one very important fact which needs to be noted that in the case of the assessee in the assessment year 2009-10 and 2010-11, the assessment in the case of the assessee have been compl....
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....ssee 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 margin. He has further noted that at the time of survey/search assessee could not produce registers, books of account and details of sale of milk. 11. On the contrary, the assessee before the AO vide letter dated 16.11.2009 had stated as under: "Your query regarding the statements made by the staff that they have not sold the milk is wrong in nature as you ha....
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....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, Khar Pali 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 Rs. 170/- per kg. At the end of the day while closing, I submit the cash and the balance paneer at the shop at Durga Niwas from where I took it in the morning. I prepare a sheet which is available with me in a printed format on which it is written the amount of product taken, amount of product sold in a day, cash received, cash submitted and the balance paneer submitted. I prepare this sheet on daily working basis. The shop is open for all days in a week from 8.30 a.m. ....
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....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 value-wise. From the perusal of the stock register, it is seen that so far as sale of milk is concerned, the quantity of sales is quite less as compared to the quantity used for manufacturing of various milk products. For example, in the month of April 2007, the quantity of milk sold is 560 liters on 04.04.2007 and 481 liters on 30th April, 2007. Similarly, in the month of May ....
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.... 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 not be updated. However, regularly our accounts are maintained regularly but due to the above two reasons the accounts were not there". Further, the relevant reply of the assessee filed before the AO vide letter dated 05.11.2009, 10.11.2009, 19.11.2009 & 7th December, 2009 reiterating the maintenance of books of account and the nature of details before the AO, ar....
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.... 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 rightly and all evidences are paged from pg. no. 37 to 39. The copy of the statement of Balkrishna Shinde, Pratap, Malkar, Prashant Balkirshna Chavan, Ramugrah Maurya, Baldev Singh is attached herewith which is evident that the sale of milk was executed thereby not retracting the statement but defining the statement more clearly, "Sir we have nev....
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....eavily 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. Therefore, the finding of the CIT (A) on this issue is fair and does not call for any interference. Accordingly, ground no.3 is dismissed. 13. Ground no.4 relates to merits of addition of Rs. 12,15,244/- confirmed by the CIT (A) as per the estimations discussed above. We have already extracted the finding of the AO as well as the CIT (A) in the preceding para....
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....her 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 Rs. 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 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....
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....ecifically 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 Rs. 32,72,780/-. The relevant extract of the letter is as under: "C) As per your questioner regarding the cash of Rs. 8,34,000/- + Rs. 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 Rs. 39058/- & Swaranjit Singh Bajaj, the total cash in hand was Rs. 190460/- & Bhupender kaur Bajaj, the total cash in hand was Rs. 268095/- & Gurpreet kaur Bajaj, the total cash in hand was Rs. 246898/- & Punjab Sind dairy products pvt ltd the total in hand was Rs. 2528269/- Hence the total cash in hand by the group is 32,72,780/- (thirty two lakhs seventy two thousand seven hundred eighty only) all the relevant details are enclosed in (page no. 47 to 51) which gives complete details regardi....