TaxTMI 
TaxTMI 
2011 (12) TMI 677
X X X X Extracts X X X X
X X X X Extracts X X X X
....me Tax Act, 1961. Reliance in this regard is made on decision of Hon'ble Jurisdictional High Court in CIT vs. Bajrang Textiles 205 CTR 287 (Raj.)." 2. That under the facts and circumstances of the case the learned CIT(A) further erred in not annulling order of the learned AO which was framed by him beyond time provided in section 153(2) of the IT Act 1961 which was extended by learned AO by appointing Special Auditors u/s 142(2A) and extending their time again and again thus taking benefit of proviso to sec.153(4)." 2.2 A survey u 133A of the Act was carried out on 01-10-2008 at the business premises of the assessee. On the basis of the loose papers and incriminating documents found during the course of survey, a notice u/s 148 of the Act was issued on 2nd March, 2009 with prior approval of the Addl. CIT, range 2, Kota. The notice was duly served on the assessee on 4-3-2009. In response to this notice, the assessee vide letter dated 8th April, 2009 submitted that original return which was filed on 3rd Dec. 2003 may be treated as return in response to notice u/s 148 of the Act. The AO in his assessment order has observed that the assessee was totally non-cooperative not ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A), the assessee filed the written submissions and such written submissions are available at para 4.2 of ld. CIT(A)'s order which are reproduced as under:- ''4.2 Appellant in his written submissions argued that copies of impounded documents were not given to him before filing of return. It was also argued that copies of impounded documents were not given even before referring the case for special audit u/s 142(2A). It was further argued that there was no complexity in the accounts, which required special audit. In support of his argument, appellant relied on following judicial decisions: (a) Peerless General Finance & Investment Co.Ltd.& ANR vs. Dy.CIT & ORS - (1991) 156 CTR (Cal) 512. (b) Muthoottu Mini Juries vs. Dy.CIT & ANR (2001) 166 CTR (Ker) 180. (c) State Forest Corporation vs. Joint CIT (2001) 170 CTR (HP) 133. (d) Allidhara Texpro Engineering (P) Ltd. vs. Dy.CIT (2009) 223 CTR (Guj) 481. (e) West Bengal State Co-operative Bank Ltd.vs. Jt. CIT & ORS (2004) 190 CTR (Cal) 245. (f) Rajesh Kumar & ORS vs. Dy.CIT & ORS (2006) 206 CTR (SC) 175. (g) Hind Samachar Ltd. vs. CIT & ANR (2008) 216 CTR (SC) 303. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ible for him to provide information called for by the authorities, reply questions posed from them by Deptt. compute concealed income, if any, prepare return in compliance to notice u/s 148 and to verify if there are complexities in accounts which justifies appointment of Special Auditors in consonance to provisions of Sec.142(2A) of the Income Tax Act, 1961 etc.etc. (iv) During 01.10.2008 to 07.09.2009 the learned AO did not called me for any explanation on impounded papers. (v) Vide his letter no.2236 dated 07.09.2009 the learned AO asked me to explain on or before 17.09.2009 why considering nature and complexity of the accounts seen in my impounded records and in the interest of revenue my accounts/ impounded records for Ass.Year 2003-04 to 2007-08 be not got audited u/s 142(2A) of the IT Act, 1961. It was also mentioned in the last para of this letter that this is last opportunity to me and that if I did not complied this letter there shall be no option but to assume by him that I do not have any objection (PB 21). I may add here before this letter I never received any communication from learned AO or any other authorities either in relation to impounded paper....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t as per letter dated 19.11.2009 was 31.12.2009. In consonance to proviso to sec. 142(2C) the learned AO may extend time either suo motto or on an application made in this behalf by the assessee for any good and sufficient reasons. (ix) In this regard I reproduce sec.142(2C) which reads:- "(2C) Every report under sub-section (2A) shall be furnished by the assesse to the [Assessing] Officer within such period as may be specified by the [Assessing] Officer: Provided that the [Assessing] Officer may, [suo motu, or] on an application made in this behalf by the assessee and for any good and sufficient reason, extend the said period by such further period or periods as he thinks fit; so, however, that the aggregate of the period originally fixed and the period or periods so extended shall not, in any case, exceed one hundred and eighty days from the date on which the direction under sub-section (2A) is received by the assessee." In this case time was extended by the learned ITO from 31.12.2009 to 28.02.2010, from 28.02.2010 to 28.03.2010 and from 28.03.2010 to 30.04.2010 (PB 31, 33 & 35) on request of Special Auditors which is beyond provisions of section 14....
X X X X Extracts X X X X
X X X X Extracts X X X X
....opriate to call me for assistance. 2.2 As submitted in para 2(vii) above the terms of references of audit were given in letter dated 19.11.2009 which includes:- (a) To examine all the books of account, bills, vouchers, loose papers, documents, bank statements etc. and to prepare cash inflow/ outflow statements, cash book, ledger, trial balance, final accounts i.e. trading and profit and loss account, balance sheet etc. for different years as mentioned above with the aim to enable the department to arrive at the true state of financial affairs of the various concerns in which the assesses is associated either as a proprietor or partner (both in individual or HUF capacity) or a Director of Company. (b) To list all the transactions of loans / deposits taken /accepted by the assessee during the aforesaid assessment year above Rs. 20000/- each otherwise than through account payee cheque, giving such particulars as name and address of the borrower, date of loan, period of loan,, interest rate, amount of interest, details and security, amount received back, mode of repayment etc. (c) To list all the transactions of loans given by the assessee during the afore....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ecial Auditors (PB 27 to 29). 2.4 The Hon'ble Calcutta High Court in WEST BENGAL STATE CO-OPERATIVE BANK LTD. VS. JOINT COMMISSIONER OF INCOME TAX & ORS. - (2004) 190 CTR (CAL) 245. while discussing complexity of the accounts has held:- "Audit - Special audit under s. 142(2A) - Conditions precedent - Assessee-co operative banks accounts already audited not only under s.44AB but also by the Directorate of Cooperative Audit appointed by the State Government - Neither books of assessee examined by AO so as to form an opinion as regards complexity of accounts nor opportunity of hearing given which was necessary in view of civil consequences of order under s.142(2A) - CIT granting approval in a mechanical way - Order of AO under s. 142(2A) and approval of CIT invalid, hence quashed. Before he comes to the conclusion, as to the nature and complexity of the accounts, he shall make a genuine and honest attempt to understand the accounts of the assessee and appreciate the entries therein and in case of doubt, he should seek explanation from the assessee or his representative. A cursory look at the books of account is not sufficient for formation of opinion by t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....very sure that there shall be appointment of Special Auditors, copies of impounded papers shall not be given to me to enable me to get it audited from Special Auditors but auditors shall go through records in Income Tax Office, his go through to the records shall be limited to those papers only which shall be thought appropriate by the learned AO, period for submission of report by auditors shall be extended again and again and that after completion of audit only for eyewash copies of impounded records shall be given to me. It appears it was collusion wherein unfortunately Auditors also supported Deptt. Supported because Hon'ble Special Auditors were well aware of audit ethic and when it was not possible for him to conduct audit in presence of auditee, he could have refused for the same. Normally after verification of papers/ documents Auditors place their identification mark thereon togetherwith their seal to enable him to justify that who had verified a particular paper, however from the zerox copies of the impounded papers it appears that he has not done so in this case which supports that no verification of records and even important papers was made by him. Simply some papers a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he preparation of fresh books by referring the matter to an auditor under special audit. Audit is for the purpose of satisfying one about authenticity and credibility of accounts prepared by the assessee but not for preparing new account books as per directions of AOs. Apparently the Tribunal found that it was abuse of process by the AO. The findings given by the Tribunal are findings of fact based upon the relevant material." 2.10 Report of Special Auditors for Ass.Year 2003-04 to 2008-09 is at PB 37 to 56 of which reports for Ass.Year 2003-04 to 2005-06 are reproduced below:- COMMENTS & OBSERVATIONS OF THE AUDITORS APPOINTED U/S 142(2A) FOR THE ASSESSMENT YEAR 2003-04 & 2004-05 We have been appointed auditors u/s 142(2A) by the worthy CIT, Kota vide his office letter no. CIT/KOTA/ITO(T)/2009-10/2540 dated 13.11.2009. After examining the impounded books and documents lying with the Income Tax Officer, Ward-2(1), Kota our comments and observation are as follows:- 1. Letters of requirement of documents, information and explanation were sent on 13.01.2010, 16.03.2010, 08.04.2010 &12.04.2010. The assessee replied vide his letter dated 21.01.2010,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....struction Co.Bundi 01.11.04 to 15.11.04 109839 1216 76 Janta Construction Co.Bundi 01.01.05 to 15.01.05 6050 77 Janta Construction Co.Bundi 01.02.05 to 15.02.05 83940 78 & 79 Janta Construction Co.Bundi 16.02.05 to 28.02.05 126554 39076 80 & 81 Janta Construction Co.Bundi 01.03.05 to 15.03.05 169997 97 & 98 01.02.05 to 15.02.05 115700 Total: 895603 375919 3. No explanation/verification is available, about the Closing Stock of Rs. 228200/- appearing in Loose paper no.45 annexure no. 23 of impounded books, which is of Rs. 244200/- in Balance Sheet. Thanking you, Yours faithfully, Sd/- (P.Khandelwal) CHARTERED ACCOUNTANT From these reports you will please find that auditors have gathered informations for learned AO to enable him to take decision on those informations. We with respect submit it neither reflects any complexity in accounts nor it justifies role of the Special Auditors in terms of provisions of sec.142(2A). 2.11 As mentioned in the learned AO's appointment letter dated 19.1....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lied in writing but telephonically my counsel had submitted to learned AO that Return has been filed in his ward on 31.03.2009 manually. Second instance was due to illness of Shri Babu Lal Somani and third I had visited office of the learned AO but learned AO did not allowed me to enter in his chamber. 2.13 From above it is clear that purpose of appointment of Special Auditors u/s 142(2A) was two fold - (i) that he should assist learned AO in computing concealed income; and (ii) time available u/s 153(2) is got extended. 2.14 In view of aforesaid submissions and also in light of decision of Hon'ble Jodhpur ITAT Bench in Bajrang Textiles Vs. Dy CIT which is affirmed by, Hon'ble Rajasthan High Court in Bajrang Textile (supra) and also decision of Hon'ble Apex Court Sahara India (supra) I request orders from Ass.Year 2003-04 to 2008-09 deserves annulment and therefore I pray for the same." 2.8 On the other hand, the ld. DR submitted that the AO gave the opportunity to the assessee before referring the matter of special audit to the ld. CIT, Kota. The assessee has not availed the opportunity. The assessee was not at all cooperative during the course of survey or as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l these documents have been mentioned relating to M/s. Somani & Company. The Photostat copy of letter signed by Shri Babu Lal Somani on the letter head of M/s. Somani & Co. dated 25-03-09 is available at page 18 of the paper book. In this letter, the request has been made to give Photostat copy of the documents mentioned at serial no. 1 to 9. The assessee Shri Ritesh Somani vide letter dated 21-04-09 requested the AO to provide the Photostat copy of the books of accounts seized and to give copies of the statement recorded. Again a request was made vide letter dated 26-08-2009. The AO vide letter dated 17th Sept. 2009 gave an opportunity to the assessee to show cause as to why matter be not referred to special audit. Page 22 of the paper book contains the letter dated 17-09-2009 of the assessee in which the assessee submitted that Photostat copies of the documents be given and thereafter some time should be provided so as to enable the assessee to explain as to whether the special audit is needed or not. Page 23 of the paper book contains the letter dated 17-09-2009 issued by the AO. In this letter, the AO has mentioned that none has attended the proceedings in response to letter da....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... search as per his directions. The auditor was also required to prepare the trading and profit and loss account which were recorded in the regular books of account and further to determine the undisclosed income of the block period. The Hon'ble High Court observed that apparently the order was for preparing fresh books rather than to conduct the special audit. Hon'ble High Court observed that no authority has been given to the assessee to direct the preparation of fresh books by referring the matter to the auditor under special audit. The audit is for the purpose of satisfying one about the authenticity and credibility of the accounts prepared by the assessee but not for preparing the new account books as per direction of the AO. In the instant case the AO asked the special auditor to do the special audit in view of the provisions of Rule 14A. Rule 14A says that report of the audit is to be given in the form no. 6B. Form No. 6 B mentions about various items on which the special auditor has to give his report. Such items contained in form no. 6B was also intimated to the special auditor. It is true that the AO required the auditor to examine all the account books, bills, vou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r by the AO casts a very heavy duty on the said high ranking authority to see that the requirement of previous approval is not turned into an empty ritual. Before granting approval, the Chief Commissioner or the Commissioner, as the case may be, must have before him material on the basis whereof an opinion in this behalf has been formed by the AO. The approval must reflect the applications of mind to the facts of the case. Rules of natural justice are not embodied rules. The expression ''natural justice'' is also not capable of a precise definition. The underlying principle by natural justice, evolved under the common law, is to check arbitrary exercise of power by the State or its functionaries. Therefore, the principle implies a duty to act fairly i.e., fair play in action. The aim of rules of natural justice is to secure justice or to put it negatively, to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made they do not supplant the law but supplement it.'' 2.11 The proviso to Section 142(2A) was inserted by the Finance Act 2007 w.e.f. 01- 06-2007 vide which it was provided that the AO will not direct the assessee ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... year for which special audit was ordered. The hearings were fixed on two dates and on these two dates, the assessee has not appeared. The Hon'ble High Court referred that the audit was referred for the contingencies not referred u/s 142(2A). The audit was not referred on the ground that there was complexity of accounts and the order of reference of special audit was cancelled. Thus this case is also of no help to the assessee because the AO has taken into consideration the factors mentioned in Section 142(2A) before making the proposal of referring the matter for special audit. 3. Allidhara Texpro Engineering (P) Ltd. Vs. DCIT , 223 CTR 481 (Guj. In this case, the Hon'ble High Court noticed that the show cause issued by the AO does not contain any whisper in respect of the complexity of accounts either from FFPL or GTPL. Hence, in respect of these two companies, the Hon'ble High Court cancelled the orders of the AO for referring the matter for special audit. However, in respect of other two companies it was noticed that the auditors submitted their report and the assessments have been made on 31-03-2008 while these two companies have filed the petitio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r completing the special audit. 3.2 It will be useful to reproduced Section 142(2C) of the Act ''142(2C) Every report under sub-section (2A) shall be furnished by the assessee to the Assessing Officer within such period as may be specified by the Assessing Officer: Provided that the Assessing Officer may, suo motu, or on an application made in this behalf by the assessee and for any good and sufficient reason, extend the said period by such further period or periods as he thinks fit ; so, however, that the aggregate of the period originally fixed and the period or periods so extended shall not, in any case, exceed one hundred and eighty days from the date on which the direction under sub-section (2A) is received by the assessee.'' 3.3 The word 'suo motu' in the proviso has been inserted by the Finance Act 2008 w.e.f. 01-04-2008. In the instant case, the audit was proposed vide letter dated 17th Sept 2009 and at that relevant time, the AO as per provision to Section 142(2 C)) was having the power to extend the period for submitting the report by the special auditor, even otherwise, the Hon'ble Allahabad High Court in the case of Ghaziabad Development Auth....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at the time the assessee said nothing about this firm in the statement. The assessee was asked about the gross income of Rs. 1,00,843/- of M/s. Deepak Stone Co. During the course of assessment proceedings, the assessee was shown respective Annexures i.e. page 23 and 48 of impounded material and as reported in Special Audit u/s 142(2A) by the auditors. After perusing the said Annexures, the assessee himself surrendered undisclosed income of Rs. 2,78,381/- which is 7.8% of total turnover of Rs. 36,94,608/- from that firm. The AO has not accepted such surrender and according to him, the unrecorded sales are to be added to the income of the assessee. Thus the AO made an addition of Rs. 36,94,609/- as against Rs. 2,78,381/- disclosed by the assessee. During appeal proceedings, the assessee requested to the ld CIT(A) that it is lime stone sale to Shriram Cement Works wherein there is very little margin. The assessee however admitted that he did not have books of accounts for this business and therefore offered 5% NP thereon which is at par to sec.44AF. The ld CIT(A) however sustained income from this business at Rs. 2,78,381/- against Rs. 36,94,608/- determined by the AO. Besides, the AO....
X X X X Extracts X X X X
X X X X Extracts X X X X
....iled with the original return. When there are unrecorded sales, the assessee has already surrendered profit. It is not the case of the revenue that such sales represents the excess cash of the sale price as shown in the books of accounts so that the same can be considered as profit. If an amount is received over and above the bill then such amount can be added as income. As per provisions of Section 292C, the document found during the course of survey is to be considered as correct and therefore, the gross profit reflected in that paper is to be presumed as correct profit. Moreover, the sales in M/s. Swastik Stone Crusher were only to the extent of Rs. 20.71 lacs and therefore, the entire amount during the course of survey cannot be added as income. 4.6 M/s. Shree Ram Cement Works has stated in their letter that they have received supplies from M/s. Deepk Stone Company in the financial year 2001-02 to 2003-04. The profit earned in the immediately preceding year from M/s. Deepak Stone Co. was sufficient for the capital required for conducting the business of M/s. Deepak Stone Co. Thus the ld. CIT(A) was not justified in confirming the addition of Rs. 1,29,132/-. Hence, the ground....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2.47% and NP of 32.12%. It will be therefore reasonable to estimate profit @ 35% on unrecorded sales of Rs. 1102817/-, which gives figure of Rs. 385986/-. AO is therefore directed to restrict addition to Rs. 385986/- under this head. Ground No.4(iii) is thus partly allowed.'' 5.5 Before us, the ld. AR has filed the submissions as under:- ''(i) That I am subject to sales tax and as such registered dealer under the provisions of Sales Tax Act. Sales Tax Authorities have not disputed my disclosed sales. Undisclosed turnover basis whereof is letter dated 12.04.2010 of Hon'ble Special Auditors (PB 227) as well as letter dated 26.05.2010 of learned AO (PB 78) only are without any supporting. It is therefore submitted that the same be brushed aside and addition sustained on basis of same by Hon'ble CIT(A) be deleted; (ii) In alternate I submit that even if my aforesaid submission is not accepted and undisclosed sales as worked out by learned AO is retained NP rate of 5% which is at par to sec.44AF or NP rate as per our books 6.31% (PB 58) (Reliance is made on CIT Vs. Balchand Ajit Kumar 186 CTR (MP) 419; Manmohan Sadani Vs.CIT 304 ITR 52 (MP) & CIT Vs. President Indus....
X X X X Extracts X X X X
X X X X Extracts X X X X
....made the following submissions. "The learned AO on the strength of seized papers - Annexure-18 page 56 & 57 - worked out NP rate of 35% on sales Rs. 2017758/- and made addition of Rs. 548805/-. I submit these Annexures relates to Ass.Year 2007-08 & 2008-09 and have no relevancy with Ass.Year 2003- 04. In this regard only guide may be either past history or a comparable case. As there is no past history in my case best guidelines may only be drawn from comparable case. I have come to know that in case of Maheshwari Crushers the learned ACIT, Circle-1, Kota has accepted NP rate of 7.45%. Copy of assessment order is enclosed. I therefore submit that in my case reasonable NP rate of 7.45% be applied which shall bring addition to Rs. 81211/- and rests additions of Rs. 467594/- be deleted." 6.4 The ld. CIT(A) has confirmed the addition after observing as under:- ''8.3 From the perusal of assessment records it is found that during the course of survey loose paper was found, in which Trading & Profit & Loss Account for the period 01.01.2007 to 30.11.2007 is drawn. As per this account GP of Rs. 5927309/- is declared on total sale of Rs. 94,87,962/-, which is 62.47% and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d if the amount of Rs. 410190/- is divided by Rs. 40/- then the number of trolleys come to 10255 meaning there by that the assesses has 5255 trolleys in the opening stock which has not been mentioned on those lose rough papers. The weight in those 5255 trolleys would be 26275 tons the value of which at cost price at Rs. 545/- per trolley which includes all levies which would come to Rs. S45/- X 5255 = 2863975/- meaning there by that the assesses had that much opening stock, in hand on which royalty has been paid as the Same has been produced from mines but sales tax was not paid as the same was not transported to crusher site, although the same was lying in the stock at mines. . As stated above the normal weight in a trolley in DABORA is 5 tons and if the total number of trolleys in stock and in purchase is multiplied by this factor then total weight would be 10255 X 5 = 51275 tons and average yield of grit is 65 % which includes sand and smaller sizes as well as such the production of final material would be 65% of 51275 tons = 33329 tons and average area covered by a ton is 35 eft. On the basis of above formula the sales of grit in the loose paper will be 9487962 / Rs. 8.2 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sted learned AO that in order to have sales of Rs. 9487962/- considering sales rate per cft. it is necessary that there should be opening stock of Gitti / Dabora or extra purchase of Gitti/ Dabora Rs. 2601225/-. Besides if NP is to be worked out it is necessary that deduction should be given for depreciation and financial expenses also. The learned AO after this letter did not ask any question but applied profit rate of 35% and after reducing disclosed GP of Rs. 157400/- made addition of Rs. 548805/-. 5.04 During hearing of appeal I submitted as under:- (i) The learned AO failed to appreciate this fact that these papers were prepared for Bank facilities wherein sales were inflated, opening and closing stock was not taken and some expenses were not shown. It's period 01.01.2007 to 30.11.2007 is taken intentionally so that these figures can not be matched with the ROI figures or accounts books. (ii) The learned AO also did not consider the fact that this Annexure relates to Ass.Year 2007-08 & 2008-09 and have no relevancy to assessment year 2003-04. (iii) That learned AO did not found any discrepancy in our accounts which is supported by voucher wh....
X X X X Extracts X X X X
X X X X Extracts X X X X
....levancy with my business. During appeal hearing I also submitted that these papers relate to Ass.Year 2007-08 and /or Ass.Year 2008-09 and not to earlier years. Even Hon'ble Special Auditors have taken it in their reports relating to Ass.Year 2007-08 (PB 45) & Ass.Year 2008-09 (PB 53) only and not in earlier years. In my business to have GP at 62% & NP at 32% is not possible. Besides from a look of these papers your honour will please observe that there is neither opening/closing stock nor it has expenses, like interest, depreciation etc. which have substantial effect on GP / NP. Besides purchases viz-à-viz sales of Rs. 9487962/- are substantially less. This all appears to be done to improve trading results to get maximum bank finance. 5.08 I also submit sir that the approach of learned AO while giving deduction of GP was not fair. He did not appreciate this fact that my accountant had prepared accounts unscientifically. If my accounts right from Ass.Year 2003-04 to 2006-07 also presented in the manner it was presented in Ass.Year 2007-08 & 2008-09 (PB 57) my GP rate in all six years shall match to each others (PB 58). 5.09 In view of aforesaid facts I subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... also. The assessee was asked to explain the source of such advance before the AO. The assessee stated that this Annexure does not relate to the assessee and relate to his father and mother. However, no supporting materials were furnished by the assessee in the form of confirmation from his father and mother. Therefore, the AO treated the advance as unexplained u/s 69B of the Act and also included the interest receivable on such advance @ 18% . Thus the AO made total addition of Rs. 3,48,100/-. 7.3 Before the ld. CIT(A), the assessee has made the following submissions. "On the basis of Annexure 24 the learned AO has made additions of loans of Rs. 295000/- and interest @ 18% thereon at Rs. 53100/- thus totaling to Rs. 348100/-. The learned AO did not appreciate this fact that investment was of Rs. 555000/- in account of Allanoor, Rs. 50000/- in Account of Ashok Jain, Rs. 125000/- in a/c of Ganesh Lal Gujar and Rs. 50000/- in account of Pramod Jain thus totaling to Rs. 780000/- which were already disclosed by Smt.Meena Somani in her books of accounts Smt. Meena Somani during assessment proceedings had submitted that Annexure-24 pertains to her business activities an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(iii) No notice u/s 148 was given to Smt.Meena Somani for Ass.Year 2006-07 & 2007-08. (iv) Assessment of Smt.Meena Somani for Ass.Year 2008-09 was made u/s 143(3) and no addition on this issue were made like Ass.Year 2002-03 to 2005-06. (v) When togetherwith letter dated 21.12.2010 copy of the Cash Book and Ledger accounts of parties were filed during appeal proceedings of Smt.Meena Somani before the Hon'ble CIT(A) and Hon'ble CIT(A) forwarded a copy of the same to learned AO he made no comments on this issue in his remand report. (vi) The Hon'ble CIT(A) had also verified cash book and ledger accounts during appeal proceedings of Smt.Meena Somani and found it matching with Annexure 24. (vii) Matter in relation to Ass.Year 2004-05 to 2008-09 in case of myself, Shri Babulal Somani and Smt.Meena Somani for limited purpose i.e. verification of Cash Book of Smt.Meena Somani viz-aviz Annexure-24 was remitted back to learned AO by Hon'ble CIT(A). The learned AO verified all entries from Ass.Year 2002-03 to 2008-09 and did not found any wrong therein (PB 241 to 250).'' 7.7 We have heard both the parties. The ld. CIT(A) has clearly mentioned that the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... supplied the line stone to M/s. Shree Ram Cement Works. As per the documents, the gross profit was Rs., 1,00,843/-. The ld. CIT(A) has upheld the profit to Rs. 1,26,981/- after applying the gross profit rate of 7.53%. This issue has been considered in the case of the assessee for the assessment year 2003-04 and we have upheld that estimated profit is to be applied on the sales which have been made outside the books of accounts for which trading has been found during the course of survey. Thus we hold that the ld. CIT(A) was justified in restricting the addition from Rs. 16,86,335/- to Rs. 1,26,981/- 12.1 The second ground of appeal of the revenue is that the ld. CIT(A) has erred in deleting the addition made on account of unrecorded investment of Rs. 3,54,000/-. 12.2 We have heard both the parties. The addition is based on Annexure A-24 and on the basis of such Annexure, the addition has been deleted in the assessment year 2003-04 because it has been held that such Annexure belongs to Smt. Meena Somani. Following our findings for the assessment year 2003-04, we hold that the ld. CIT(A) was justified in deleting the addition of Rs. 3.54 lacs. ITA No. 620/ JP/2011 - Assesse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s all levies which would come to Rs. S45/- X 5255 = 2863975/- meaning there by that the assesses had that much opening stock, in hand on which royalty has been paid as the Same has been produced from mines but sales tax was not paid as the same was not transported to crusher site, although the same was lying in the stock at mines. . As stated above the normal weight in a trolley in DABORA is 5 tons and if the total number of trolleys in stock and in purchase is multiplied by this factor then total weight would be 10255 X 5 = 51275 tons and average yield of grit is 65 % which includes sand and smaller sizes as well as such the production of final material would be 65% of 51275 tons = 33329 tons and average area covered by a ton is 35 eft. On the basis of above formula the sales of grit in the loose paper will be 9487962 / Rs. 8.2 = 1157069 eft and if 35 eft be the per ton production then the conversion into tons will be 11 57069 / 35 = 33059 that means the same will almost tally with the figures as mentioned above. The normal selling price is Rs. l4/- for the grit of 40 mm size and 20 m size and the rate of sale of thin grit is only Rs. 5/- per sq ft. and the production of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... did not ask any question but applied profit rate of 35% and after reducing disclosed GP of Rs. 370893/- made addition of Rs. 904582/-.'' 14.3 Before the ld. CIT(A), the assessee submitted as under:- (i) The learned AO failed to appreciate this fact that these papers were prepared for Bank facilities wherein sales were inflated, opening and closing stock was not taken and some expenses were not shown. It's period 01.01.2007 to 30.11.2007 is taken intentionally so that these figures cannot be matched with the ROI figures or accounts books. (ii) The learned AO also did not consider the fact that this Annexure relates to Ass.Year 2007-08 & 2008-09 and have no relevancy to assessment year 2005-06. (iii) That learned AO did not found any discrepancy in our accounts which is supported by voucher which may suggest him for any additions. (iv) That in our line of business GP rate is generally about 10% and NP rate about 5%. However, in my case there is peculiar feature I have little sales in market and substantial sales are to my father Shri BL Somani who makes sales/ supplies to railways wherein he is already showing NP. Considering these facts ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in earlier years. In my business to have GP at 62% & NP at 32% is not possible. Besides from a look of these papers your honour will please observe that there is neither opening/closing stock nor it has expenses, like interest, depreciation etc. which have substantial effect on GP / NP. Besides purchases viz-à-viz sales of Rs. 9487962/- are substantially less. This allappears to be done in order to improve trading results to get manimum bank finance. 12.08 I also submit sir that the approach of learned AO while giving deduction of GP was not fair. He did not appreciate this fact that my accountant had prepared accounts unscientifically. If my accounts right from Ass.Year 2003-04 to 2006-07 also presented in the manner it was presented in Ass.Year 2007-08 & 2008-09 (PB 57) my GP rate in all six years shall match to each others (PB 58). 12.09 In view of aforesaid facts I submit as under:- (i) Page 56-57 of Annexure 18 have no relevance to Ass.Year 2005-06 and it should not be applied in Ass.Year 2005- 06; (ii) GP disclosed in Ass.Year 2008-09 has not been disputed by the learned AO. This GP is based on Trading Accounts prepared during audit ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y submissions in earlier paras as audit has been carried ignoring principles of natural justice and also against the provisions of sec. 142(2A) and therefore I have made request for annulment of order. I am regd.dealer under the Rajasthan Sales Tax Act and the learned ACTO, Circle-2(A), Kota vide his order dated 26.06.2006 has accepted my sales at Rs. 3644210/- which is in match with sales disclosed in Trading A/c attached with ROI. Copy of order is enclosed vide Annexure-I to this letter. However without prejudice to above I submit that even if the undisclosed gitti sales are taken at Rs. 895603/- a reasonable net profit thereon should be applied and levied. GP rate of 10.18% has been disclosed by me and therefore it should be applied on undisclosed sales also. I therefore request your honour to restrict additions to 5% of Rs. 895003/- i.e. Rs. 44780/- (at par to sec.44AF) or to 10.18% of Rs. 895603/- i.e. Rs. 90998/- only." During appeal proceedings I filed copy of sales tax order (PB 67- 70) wherein sales figures were matching with my disclosed sales. My stress therefore was that there is no undisclosed sales. However to purchase peace I submitted that even if undisclosed sal....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2005-06 17.1 The first ground of appeal of the revenue is that the ld. CIT(A) has erred in deleting the addition on account of unrecorded investment of Rs. 23,30,500/- 17.2 We have heard both the parties. This addition has been based on Annexure A-24. On the basis of this Annexure, the addition has been deleted for the assessment year 2003-04 on the ground that such Annexure belongs to Smt. Meena Somani. Following our findings for the assessment year 2003-04, we hold that the ld. CIT(A) was justified in deleting the addition of Rs. 23,30,500/- 18.1 The third ground of appeal of the revenue is that the ld. CIT(A) has erred in deleing the addition of unrecorded business of Rs. 1,15,700/-. 18.2 During the course of assessment proceedings, the AO intimated that there are undisclosed sales of Rs. 1,15,700/- besides sales of Rs. 8,95,603/-. Before the AO, it was submitted that such sales are included in the sales of Rs. 8,95,603/-. The auditor has also pointed out the undisclosed sales of Rs. 8,95,603/-. The AO has received information u/s 133(6) of the Act and included the sum as income representing undisclosed sales.. 18.3 The ld. CIT(A) has decided this issue after ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the case of the assessee for the assessment year 2005-06. Therefore, we hold that net profit rate of 7.45% before depreciation is to be applied and thereafter deduction of depreciation be given. 22.1 The ground of appeal no. 2 (ii) of assessee and ground of appeal no. 3 of the Deptt are of the same issue. Therefore, these grounds of appeal are disposed of together and the ground of appeals are read as under:- GOA no.2(ii) of assessee - "That under the facts and circumstances of the case the learned CIT(A) erred in estimating profit rate of 35% on undisclosed sales of Rs. 132244/- as against disclosed NP rate of 4.87% as per Trading A/c attached with ROI" GOA no.3 of Deptt.- "The learned CIT(A) erred in restricting addition of unrecorded receipts from Rs. 132244/- to Rs. 46285/-." 22.2 The special auditor has mentioned that there unrecorded grit sales of Rs. 217,72,584/-. Before the AO, the assessee submitted that such sales included the recorded sales. Before the AO, the assessee submitted that net profit rate be applied on the balance unrecorded sales of Rs. 18,58,687/- but the AO did not accept the submissions and made the addition of Rs. 27,72,5....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lso. In view of this fact addtions based on undisclosed gitti sales of Rs. 1858687/- be deleted. (ii) In alternate I submit that even if my aforesaid submission is not accepted and undisclosed sales as per order of Hon'ble CIT(A)'s order is retained at Rs. 1858687/- NP rate of 4.87% (subject to depreciation) as per my books of accounts be applied (PB 58). (Reliance is made on CIT Vs. Balchand Ajit Kumar 186 CTR (MP) 419; Manmohan Sadani Vs.CIT 304 ITR 52 (MP) & CIT Vs. President Industries 158 CTR 372)(Guj)) or NP rate of 5% which is at par to sec.44AF or NP rate of 7.45% as accepted in comparable case M/s Maheshwari Crushers, Kota - Ass.Year 2007-08 (PB 225-226) be applied.'' 22.5 We have heard both the parties. The assessee has shown the sales to the extent of Rs. 35,29,561/- to the Sales Tax Department. In the comparative chart at page 58 of the paper book, the assessee has shown the sales to the extent of Rs. 35,29,561/-. The net profit rate before depreciation is 4.87%. In the preceding year, we have held that net profit rate of 7.45% be applied before depreciation. Accordingly the AO will apply the net profit rate of 7.45% on the sales which included both recorded....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 10,15,500/- was further transferred to M/s. Somani & Company in assessment year 2008-09. The assessee was asked to explain as to why this sum should not be treated as income for assessment year under consideration. The assessee vide rely dated 3-6-2010 stated that during the last preceding assessment years, he has offered the undisclosed income from unrecorded sales. The total voluntary disclosure from assessment year 2003- 04 to 2006-07 and after including undisclosed income for the assessment year under consideration came to Rs. 8,91,358/-. The assessee offered income emerging out of the entire entries which will come to Rs. 1,24,142/-and it will represent the difference between Rs. 10,15,500/- and Rs. 8,91,358/-. This contention was not accepted to the AO because voluntary disclosure of income was against unrecorded sales and such profit did not pertain to JCB rent. The AO accordingly made the addition of Rs. 10,15,500/-. 29.3 Before the ld. CIT(A) the assessee submitted as under:- "Sir, I do not have any JCB and therefore no case of any JCB receipts. These credits are from Daborawalas towards Dabora purchase which has been tfd.to my fathers firm in subsequent yea....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of Rs. 10,15,500/- . Hence, this issue is restored back on the file of the AO. 30.1 Ground No. 2(iii) of the assessee is that the ld. CIT(A) has erred in confirming the addition of Rs. 2.00 lacs on account of closing stock based on rough paper. 30.2 During the course of survey a paper was found which shows preparation of trading account, profit and loss account and balance sheet prepared manually. In this paper, the closing stock was altered from Rs. 12,21,400/- to Rs. 10,21,400-. Thus net profit was reduced to Rs. 2.00 lacs. The assessee vide letter dated 26th May, 2010 2 was asked to explain as to why a sum of Rs. 2.00 lacs be not added. The assessee vide reply dated 3-6-2010 stated that the balance sheet as made by the assessee show the correct figure of closing stock. The AO concluded that mistake in paper was made by the assessee intentionally to show the less net profit to evade the tax. The AO accordingly made the addition of Rs. 2.00 lacs. 30.3 Before the ld. CIT(A), the assessee submitted as under:- "The learned AO on the strength of a paper whereon stock was earlier written at Rs. 1221400/- was struck and then written as Rs. 1021400/- has made additions....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... us on this issue. Thus we confirm the findings of the ld. CIT(A). 31.1 Ground No. 2(iv) is that the ld. CIT(A) has erred in estimating the profit rate of 35% on undisclosed sales of Rs. 27,12,701/- 31.2 The revenue in Ground No. 2 is aggrieved that the ld. CIT(A) has erred in restricting the addition on account of unrecorded business from Rs. 27,12,701/- to Rs. 9,49,445/-. 31.3 We have heard both the parties. It has been noticed from the impugned documents that the assessee has made sales outside the books of accounts. The assessee has surrendered the profit of Rs. 2,35,798/- on the unrecorded sales of Rs. 26,45,349/-. Instead of accepting the surrender of addition of Rs. 2,35,798/-, the AO has made an addition of Rs. 27,12,701/- which represented unrecorded sales. The ld. CIT(A) has directed the AO to apply the net profit rate of 35%. This issue has been considered in the case of the assessee for earlier assessment years. Following our finding for those assessment years, we hold that the net profit rate of 7.45% be applied on undisclosed sources of Rs. 27,12,701/-. The AO will compute the addition to be made as against surrender of Rs. 2,35,798/-. 32.1 Ground No. 2(v) of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ons will be 11 57069 / 35 = 33059 that means the same will almost tally with the figures as mentioned above. The normal selling price is Rs. l4/- for the grit of 40 mm size and 20 m size and the rate of sale of thin grit is only Rs. 5/- per sq ft. and the production of grit size 20 mm and 40 mm is 80% and that of small size and sand is 20% meaning there by that the average rate of sale is only Rs. 8/20 per ft. excluding transport based on seized papers ( ANNEX 18/60) and if the amount of sales of Rs. 9487.962 as shown in the alleged seized paper is divided by this amount then the quantity comes to 1157069 eft. NOW if the trading account is re casted on this basis then the following figures will emerge: OPENING STOCK 2601225 SALES 9487962 PURCHASES DABORA 2726441 STOCK NIL SALES TAX 410190 ROYALTY 250022 GRIT PURCHASE 174000 ------------ ------------ 6161908 9487962 Gross Profit 33 26054 Now on the above basis, if the P/L A/C is recasted then the following figures will emerge: R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....NP rate about 5%. However, in my case there is peculiar feature I have little sales in market and substantial sales are to my father Shri BL Somani who makes sales/ supplies to railways wherein he is already showing NP. Considering these facts NP rate disclosed by me at 5.87% being very reasonable I submit it does not call for any interference. (v) In view of these facts I request for deletion of addition of Rs. 908609/- or to substitute it as per request made above. (vi) Without prejudice to above I submit that vide letter dated 30.06.2010 we had submitted to the learned AO that from purchases of Dabora (stone) to the extent of Rs. 2726441/- there can not be production of grit of worth sale of Rs. 9487962/-. In said letter we had made explanation qua quantity of stone per Dabora (stone) viz-a-viz production therefrom of different size and their sale price and thereby tried to work out that either there is opening stock of Rs. 2601225/- or there is further purchase of stone of Rs. 2601225/- or both to match sale of Rs. 9487962/-. We submit it may be partly out of stock because closing stock as per papers attached to ROI for Ass.Year 2007-08 is Rs. 1021400/- wherea....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s accepted by learned AO while applying rate for Ass.Year 2008-09. As my disclosed GP with this presentation is more than profit worked out by learned AO my submission to Hon'ble CIT(A) was that addition is uncalled for. '' 32.4 Before us, the ld. AR has submitted as under:- (i) Page 56-57 of Annexure 18 was an exercise for bank finance and figures appearing in the said papers being based on filmsy figures their results be ot applied in my case; (ii) The learned AO has grossly erred in giving deduction for disclosed profit at Rs. 195184/- which should be Rs. 1231262/-. This figure being more than profit worked out by learned AO no addition are called for; (iii) In alternate I request your honour for application of NP rate at par to comparable case (PB 225 & 226) i.e. 7.45% as against 5.87% disclosed (subject to depreciation) by me. 32.5 On the other hand, the ld. DR has supported the orders of the authorities below. 32.6 We have heard both the parties and have perused the relevant annexures as copies of such Annexures are available in the paper book. Once the assessee is maintaining the books of accounts and the incriminating papers have been scr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n my case books are rejected and rate is applied such additions may not be made. Reliance in this regard is made on:- i) ACTIT Vs. Ashoka Traders XIV TW 276 (JP) ii) ACIT Vs. Smt.Gyanwati Devi 29 TW 268 (JP) iii) Vijay Solvex Ltd. Vs. DCIT 31 TW 122 (JP) iv) Narmada Steel Ltd. Vs. ACIT 108 TTJ 741 (Amritsar)" 34.4 The ld. CIT(A) after considering the submissions deleted the addition after observing as under:- "It has been held by various judicial authorities that if books are rejected and Income is estimated by applying profit rate, then no further addition is justified u/s 40A(3). In the case of appellant income has been estimated by applying 35% profit rate on his turnover. Therefore no separate addition u/s 40A(3) is justified. Addition of Rs. 942663/- is directed to be deleted. Ground No. 5(vi) is thus allowed" 34.5 The ld. DR has submitted that the AO has rightly made the addition because the assessee has violated the provisions of Section 40(3) and the assessee has not been able to show that such payments are covered by the rule 6DD 34.6 Before us, the ld. AR has submitted as under:- ''We submit sir that in ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CIT, 133 TTJ 102 has also held that once an income of the assessee is estimated by applying the gross profit rate or net profit rate then no disallowance can be made u/s 40A (3) or any other provisions. The proviso to Section 40A(3) makes an exception that cash payment is not to be disallowed if it is an account of business expediency. After considering the submissions of the assessee, we feel that no separate addition is required to be made u/s 40A(3) because the books of accounts has been rejected and there has been . The addition of Rs. 3.21 lacs made u/s 40A(3) is deleted.'' Thus Ground No. 3 of the revenue is dismissed. 35.1 The fourth ground of appeal of the revenue is that the ld. CIT(A) has erred in deleting the addition on account of other expenses of Rs. 1,74,100/-. 35.2 The AO has disallowed 20% on adhoc basis from the expenses of Rs. 8,.70,507/-. The disallowance has been made on the ground that the assessee has failed to produce the bills and vouchers. Since we had already held that net profit rate is to be applied and therefore, no addition in respect of expenses is to be made. We therefore, hold that the ld. CIT(A) was justified in deleting the addition on a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... we had requested to the learned AO that out of sales of Rs. 3099905/- sales of Rs. 2020052/- are appearing in our books which needs set off. Besides we had also made request that sales of Rs. 2190000/- has already been shown by us, as submitted in ground no.4 (iii), and therefore this also needs set off . After these two set off balance sales remains around Rs. 1900000/- whereon nett NP rate may be applied, copy of letter is enclosed vide Annexure-L to this letter. The learned AO did not accept our submissions and not only took sales figure at Rs. 6049841/- but also taxed it fully as against application of reasonable NP rate thereon. As submitted while dealing with ground no.4(iii) sales of Rs. 2190000/- has been shown by us in ROI. Besides sales of Rs. 2020052/- is already in accounts which is evident from account of M/s Janta Construction Company also copy whereof is enclosed vide Annexure-M to this letter. I therefore submit these two sales of Rs. 21900000/- + Rs. 2020052/- totaling to Rs. 4210052/- should be excluded from Rs. 6049841/- and rests sales of Rs. 1839789/- Rs. (6049841 - 4210052) be taken as undisclosed sales whereon a reasonable NP rate may be ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ances of the case the learned CIT(A) erred in confirming trading addition of Rs. 324694/- applying GP rate of 35% on disclosed sales of Rs. 6897900/- on basis of impounded papers found during survey - (Annexure 18 Page 56-57) which relates to Ass.Year 2007-08 / 2008-09 (both years partly) and which was prepared by accountant on flimsy figures in order to plan for Machinery Loan which has no match with the appellant's books of accounts." 39.2 We have heard both the parties. In the written submission, it has been mentioned that typographical error in drafting the ground of appeal and figure of 35% should be modified to 40%. This issue has been considered in the case of the assessee for the assessment year 2007-08. Following our finding for the assessment year 2007-08, we hold that the gross profit rate of 40% is not to be applied during the year under reference. The net profit rate is better as compared to preceding year. It is true that the books of accounts are to be rejected because they do not contain all the necessary details. Since the net profit rate is better as compared to preceding year, therefore, there is no case of making trading addition on disclosed sales. ITA....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ade this addition only on his presumption. First of all the expenses of Rs. 115921/- are not claimed by appellant in the Profit & Loss Account. As mentioned by AO himself, the building expenses have been capitalized in Plant & Machinery Account and only depreciation @ 15 % thereon is claimed, in view of reply of appellant as mentioned above, addition of Rs. 115921/- is not justified and the same is directed to be deleted. Ground No. 4(ii) is thus allowed." 41.5 Before us, the ld. DR has stated that the assessee has not been able to show the nature of the expenses and therefore, the expenses crystallized are to be added. 41.6 On the other hand, the ld. AR submitted as under:- ''We submit sir that these additions were made by the learned AO on presumptions only. We have not claimed expenses of Rs. 115921/- but have captalized platform expenses and calimed depreciation on it by transferring it to machinery account. In view of these facts addition has very fairly been deleted by Hon'ble CIT(A). Thus Ground of Appeal of Deptt. thus needs dismissal.'' 41.7 We have heard both the parties. The assessee has not claimed entire expenses in the computation of income. The asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment order is also enclosed vide Annexure K-5 wherein sales of Rs. 6897900/- is assessed. It is therefore submitted additions of Rs. 2190000/- are uncalled for and it may be deleted." 42.4 The ld. CIT(A) after considering the submissions held as under:- "It was explained by appellant before AO that figure of Rs. 2190000/- represents his cash sales. In the assessment order the AO himself has mentioned in para 6 of the assessment order that "The above contains of the assessee is not acceptable as the sale shown in his return of Rs. 2190000/- is already recorded in his regular books......". In view of this and for explanation given by appellant as above, addition of Rs. 2190000/- is not justified and the same is directed to be deleted. Ground No. 4(iii) is thus allowed." 42.5 We have heard both the parties. It was submitted before us that on different dates entries in relation to sales were made in pencil by their accountant and these are shown as sales in the audited books of accounts. Moreover, the revenue has conducted the survey and during the course of survey no excess cash was found and the assessee has given explanation and the explanation has not been held as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut any basis. Addition of Rs. 338000/- is not justified and the same is directed to be deleted. Ground No. 4(v) is thus allowed." 43.5 During the course of proceedings before us, the ld. DR submitted that the documents found during the course of survey are to be accepted as correct. It was further submited that the ld. CIT(A) has deleted the addition on the basis of additional evidence filed. 43.6 On the other hand, the ld. AR submitted as under:- ''There is no denial to this fact that during survey page no.53 of Annexure 18 order form dated 04.05.2007 of M/s Labh Engineering Works Butal Teh.Dhansura Distt.Sabakantha (Gujrat) was found (PB 219). This is also a fact that in search paper bill no.18 dated 27.10.2007 of the same party for Rs. 412000/- (PB 220) and in books of accounts payment to the party at Rs. 412000/- was found. As a note to this effect was appearing at page 5 of Audit report the learned AO taxed Rs. 338000/- (750000-412000) without further enquiries. The learned AO did not thought it appropriate to substitute machine addition of Rs. 412000/- to Rs. 750000/- and provide depreciation accordingly (PB 224). During the appeal proceedings I also filed a cl....