TMI Blog2005 (4) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The cost of stock lying at Amer Road was estimated at Rs. 70,77,645. In this way, the total stock estimated by the Department was Rs. 88,19,057. Book stock was worked out at Rs. 77,76,591. The difference of Rs. 10,42,466 was treated as excess stock of the assessee. Further, during the course of survey, excess cash was found at Rs. 38,421 and excess credit cards of Rs. 35,708 were also found. So finally, the AO made additions of Rs. 11,16,595. However, the CIT(A) has restricted the addition of Rs. 1,50,000 by giving the relief of the balance amount of Rs. 9,66,595. Being aggrieved, both the parties are before us. 3. With this background, the learned Departmental Representative submitted that the Department has accepted the gross profit rate shown by the assessee @ 27.80 per cent. So, there is no dispute about the gross profit. About the stock at Shyam Nagar, there is no dispute as the inventory was made on the cost price. The sale dispute is regarding the 'bargaining discount' given to the buyers, who are foreigners. The damage of stock value of 5 per cent was also claimed by the assessee. Thus, assessee has claimed by bargaining discount and damage @ 20 per cent + 5 per cent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oves that assessee was having accumulated spoiled and obsolete stock at the time of survey. All the books of account were available but later they got destroyed in fire. Immediately, the AO was informed accordingly. When the books got destroyed in fire, the assessee made a conditional surrender of Rs. 7,24,386 vide its letter dt. 20th Jan., 2000. In its letter, it was written that no penalty proceedings will be initiated by the Department. Further, in point No. (e), it was mentioned: "The recalculation of the valuation is made under the purchase peace and without conceding to the excess stock at the time of the search." The learned Authorised Representative further submitted that without conceding to the excess stock this was the primary condition before the AO, but the AO has not accepted the offer made by the assessee. In the said letter, the assessee specifically mentioned that surrender will be for buying the peace and get immunity from the penalty but it will not have anything regarding the valuation of the excess stock. The assessee has accepted the bargaining discount and sale price @ 15 per cent in the surrender only to purchase peace but AO has not accepted this surren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oss profit rate shown by the assessee. No defect was painted out by the Department in books of account even when the survey has been conducted. 8. Further, regarding the excess credit cards found at the time of survey, it is also noted that no foreign currency was found. The credit cards of foreign currency found related to foreign banks. These cards were in the name of the foreigners. The AO made the addition but CIT(A) observed that these credit cards were available with the assessee only for preparation of SFT (counter sale) vouchers and recording of sales as the foreign tourists and customers would not like to wait and would prefer utilizing time to visit other places in the town. So, they left credit cards, etc., for preparation and packing of goods. When they return from other places of the town by the time the goods in the packed form stands delivered to the foreigners. Without repeating, we upheld the order of the CIT(A) along with the reasons mentioned therein. The excess cash found also stands fully covered with the addition sustained by the CIT(A) for Rs. 1,50,000. Hence the ground Nos. 1 and 2 of the Department and Ground No.1 of the assessee are dismissed. 9. Groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be allowed on SFT sales. The learned CIT(A) allowed the additional claim of the assessee and directed the AO to treat the SFT sales as part of export turnover. The Department is in appeal against this direction of the CIT(A) and assessee has taken the ground Nos. 2 and 3 as alternative grounds to the ground No.3 of the Departmental appeal. 12. The learned Departmental Representative submitted that the assessee has not made any claim before the AO allowing the deduction under s. 80HHC on SFT sales, therefore, such claim cannot be entertained by the CIT(A). The learned Departmental Representative submitted that because of the direction of the CIT(A), the assessed income after appeal effect comes to Rs. 5,86,950, which is less than the returned income of Rs. 8,89,120. The learned Departmental Representative further submitted that the AO issued notices under s. 143(2) only in order to ensure that the assess has not understated the income or has not computed excessive loss or has not underpaid the tax in any manner. Since, the AO has no power to assessee the income below the returned income, the CIT(A) has also no power to assess the income below the returned income. The learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t whether the SFT sales are export sales or not is a pure question of law, therefore, the learned CIT(A) has rightly admitted the additional claim of the assessee and rightly directed to allow deduction under s. 80HHC against the sales to foreign tourist against foreign currency. Reliance has been placed on the following case laws: (a) National Thermal Power Co. Ltd. vs. CIT (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC) (b) ITO vs. Dr. V. Ramalingghaswami (1983) 6 ITD 491 (Del) (c) CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) The learned Authorised Representative further submitted with equal vehemence that the IT Authorities are quasi-judicial authorities and drew our attention to the decision of the Hon'ble apex Court in the case of CIT vs. Simon Carves Ltd. 1976 CTR (SC) 418 : (1976) 105 ITR 212 (SC) where it has been observed that the taxing authorities exercise quasi-judicial powers and in doing so they must act in a fair and non-partisan manner. Although, it is part of their duty to ensure that no tax which is legitimately due from an assessee should remain unrecovered but they must also at the same time should not act in a manner which might indicate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of the CIT(A) nor from the ground of appeal of the Department. However on merits, it may be mentioned that it is well settled principles of law that a person cannot be charged even a paisa more than what is due. The procedural provisions of s. 143(2) are applicable for AO and not on appellate authorities. The powers of CIT(A) are contained under s. 251 of the IT Act, 1961. Clause (a) of sub-s. (1) of s. 251 empowers the CIT(A) to confirm, reduce, enhance or annul the assessment. The CIT(A) has power to reduce the assessed income and this power of reduction is not restricted to the returned income. The plea of the learned Departmental Representative that the assessment order is not appealable as it does not fall in any of the conditions prescribed under s. 246(1)(a), is also not acceptable. The AO has made the additions and recalculated the 80HHC deduction at lower figure, therefore, the assessee is aggrieved from the order of the. AO and it can file an appeal before the CIT(A). The case laws relied upon by the learned Departmental Representative are distinguishable on the facts and not applicable to the case before us. In the case law reported in (1997) 142 CTR (SC) 345 : ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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