TMI Blog2008 (12) TMI 287X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on certain estimations, interpolations and extrapolations. That by itself does not mean that the books of account maintained by the assessee, duly supported by purchase and sale bills which were produced before the AO, deserve rejection. The blank bills found in the course of survey in the name of persons doing job work, painting etc. does not in any way lead that the sale figure disclosed by the assessee requires to be rejected. In my view, the rejection of the books of account by invoking provisions of section 145(3) is totally unwarranted and cannot be supported in the eyes of law. Having accepted this, the addition based on certain estimation of sales is correctly deleted by the CIT(A) as well as by the ld. JM. I agree with the findings of the ld. JM on this point. Addition made on the basis of entry recorded on certain loose papers - HELD THAT:- Now looking at the paper, it has some numerical figures but does not, in any way, show that it has some relationship with some business transactions of the assessee. The paper that was taken as a material for making the addition does not conclusively establish that it pertains to the business transaction of the firm. Now, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in view of the facts that assessee could not explain blank bills and reason for low sale in comparison to preceding years. (3) That the learned Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts in deleting the addition of Rs. 7,62,485 made on account of entry in the loose papers found in the factory premises during the survey proceedings in spite of the fact that partner surrendered the amount in the statement recorded during the survey proceedings as he could not explain the same. (4) That the decision of learned Commissioner of Income-tax (Appeals)-II, Agra being erroneous in law and on facts deserves to be quashed and that of the Assessing Officer deserved to be restored. (5) That the appellant craves leave to add or alter any or more ground or grounds of appeal as may be deemed fit at the time of hearing of appeal." 2. The relevant facts of the case are that the assessee derives income from manufacturing of Diesel Engines. Survey under section 133A was conducted at the business premises of the assessee on 16-5-2001. On the said date inventory of books of account, bills etc., stock and assets found at the premises were prepared. The survey team ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the view that the assessee has not been able to explain the decline in sales. He was also of the view that since a large number of blank bills in the name of persons doing job work, painting etc. were found at the premises of the assessee. Accordingly the possibility of inflating job work/assembly charges/painting charges etc. could not be ruled out. Apart from the fact that there was difference in stock as compared to the book what was found at the time of survey not only in terms of number of items but in terms of values. Accordingly, he was of the view that the books of account of the assessee was not correct and complete and they were rejected under section 145(3). In this background, the Assessing Officer was of the view that the method of working out the income of the assessee is to estimate the sales and apply G.P. rate. Thus since there were unaccounted purchases, he was of the view that there must be unaccounted sales also. Therefore, the sales were estimated at Rs. 4,30,00,000 as against Rs. 4,25,50,982 shown by the assessee. The G.P. rate disclosed was 17.99 per cent which was applied thereto and the G.P. which worked out to Rs. 77,35,700 as against Rs. 76,56,631 decl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee-firm or any of the partner of the assessee-firm and that the income of the assessee or any of its partners must be assessed on the merit of the case and search material if it is contrary to the anything recorded in the books of account. This is an established law that the criteria of assessment must be based on logical, evidential and correct calculation of the incomes of the assessee and not the undue pressure tactics. The so-called paper on which a figure of Rs. 7,42,485 was written is absolutely nothing to do with any concealed investment or income of the assessee or any of the partners of the assessee-firm. In a trade and industrial environment of an enterprises which running into operations of several crores of rupees of purchases, sales, banking operations, debtors and creditors it is highly amazing that any amount written on paper will constitute the incomes of the assessee. Moreover when this paper do not have any denotation or title or description on the top or middle or at the end of the paper. The calculation on the paper mayor may not be related to the business transaction of the assessee. If it was the concealed or undeclared incomes of the assessee or any of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is only a piece of evidence, the weight to be attached to which must be depend on the circumstances under which it is made. It can be shown to be erroneous or untrue." Further in the matter of Krishan Lal Shiv Chand Rai v. CIT [1973] 88 ITR 293 (Punj. Har.) it was held that "It is an established principle of law that a party is entitled to show and prove that the admission made by him probably is in fact not correct and true." 12. Not convinced by the explanation offered, an addition of Rs. 7,62,485 was made by the Assessing Officer in the following manner:- "I have considered the reply of the assessee but there is no force in the same since the partner Shri Radha Raman had surrendered on his own the investment contained/noted in the above referred paper, the firm cannot escape from the statement of partner. So the amounts noted in the above paper which comes to Rs. 7,62,485 is treated as unexplained and will be added to the income of the assessee as unexplained investment." 13. Aggrieved by this the assessee went in appeal before the First Appellate Authority. In regard to the addition of Rs. 96,181 agitated by ground No. 1 of the revenue it was submitted on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are used in the manufacture of Diesel Engine. The diesel engine can be of different horse powers as such the items used vary moreover. It was submitted that even in the same type of diesel engine the item costs would vary due to the fact of who is the manufacturer of the specific part used. On account of the use of items of different suppliers the cost can vary from 1 to 15 per cent whereas the difference between value of hypothetical stock to the actual stock is only 3.68 per cent. In the facts the actual facts have been completely ignored. It was submitted that when the surrender of Rs. 3 lakhs is accepted by the assessee is taken into consideration the difference would work out to a mere 0.61 per cent. Referring to the survey team itself it was submitted that there were many items and the value of closing stock as per stock register was ignored and the survey team instead itself wrote that they are valuing the same by approximation. In these peculiar facts the difference of 0.61 per cent it was argued in the value of notional stock when compared to the actual stock cannot be added to the income of the assessee. 17. These submissions are found recorded at pages 2, 3 and 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e found recorded at page 5 of the impugned order. Considering these the addition of Rs. 96,181 was deleted by the CIT(A) with the following reasoning:- "(3.3) I have carefully considered the facts of the case and the submissions of the AR. In my view the appellant deserves to succeed. The facts of the case clearly indicate that valuation done by the survey team was not accurate and it was in slip shod manner. The appellant has pointed out arithmetical error of Rs. 4,640 in the inventory prepared by the survey team which was found correct. Even otherwise, it was not humanly possible to value each and every spare part with, finer precision. It is also an admitted fact that after valuing the stock survey team has confirmed it with hypothetical figure of closing stock extrapolated by utilizing earlier year G.P. rate. The earlier year G.P. rate was for full year and using the same parameter on the result of business operation for 1 1/2 month cannot give accurate figure. In spite of these shortcomings, difference between actual and estimated stock was only 0.61 per cent. Considering the aforesaid fact, the amount surrendered by the appellant is sufficient to cover any discrepancy in st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been extrapolated on the basis of G.P. of the earlier years. In the peculiar facts and circumstances of the case as they stand, we find no good reason to interfere with the impugned order. Ground No. 1 raised by the revenue as such is rejected. 25. In regard to the second issue addressed by the revenue, the relevant finding of the Assessing Officer has already been considered in the earlier part of this order. Aggrieved by this, addition of Rs. 79,069 on account of rejection of books of account of the assessee under section 145(3) of the Act and the resultant estimation of sales thereon to which G.P. rate disclosed by the assessee was applied. The assessee contended before the CIT(A) that he has maintained all necessary books of account and has been getting the accounts duly audited as per the statutory requirement under section 44AB of the Act. 26. It was also submitted that detailed explanation in regard to the reasons for the decline in sales was furnished in the course of the assessment proceedings itself. It was explained that the blank bills round at the time of survey belonged to various contractors who undertook work for the assessee in regard to painting in regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in support of estimation of sales at Rs. 4.30 crores as against sales declared by the appellant at Rs. 4.25 crores. The Hon'ble Supreme Court has reconfirmed the earlier stand in case of CIT v. K.Y. Pillai Sons 64 ITR 411 where it has been decided that any lump sum add back to the trading result if found justified must be done in proper exercise of discretion objectively and judiciously on the basis of relevant material. In view of above judicial pronouncement and facts of the case, the addition made by the Assessing Officer on this account is not sustainable. I, therefore, delete the addition of Rs. 76,069 made by the Assessing Officer." 27. Aggrieved by this the revenue is in appeal before the Tribunal. 28. The learned D.R. though placed reliance upon the Assessment Order, however, he could not rebut the fact that the GP in the year under consideration despite a decline in the sales had increased. He could also not rebut the finding that the blank bills found during the survey pertained to various contractors working from the assessee's premises in regard to painting and other work of the Diesel Engines. 29. The learned A.R., on the other hand, relied upon the impugned o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings. 33. In the course of appellate proceedings the addition was challenged on various grounds namely that these are mere notings and did not represent any form of investment either movable or immovable property nor does it reflect any transaction having taken place of any nature. As such it was contended that it is simply a piece of paper on which addition or subtraction of figures were noted without any narration. The action of the Assessing Officer in adding the same as unexplained investment merely on the ground that one of the partners of the assessee-firm has admitted so at the time of survey was assailed. The action of making the addition despite the fact that in the course of the assessment proceedings it has been explained to the Assessing Officer that the statement of one of the partners Shri Radha Raman Agarwal had been recorded under pressure and duress and as such is not binding. Reliance was placed on the retraction of the same made within five days by the said person vide letter dated 21-5-2001 which was made immediately 5 days after survey by Radha Raman Agarwal. The said letter was addressed to Joint Director, Income-tax Range-I, Agra. In view of the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an established law and applied practices that the criteria of assessment must be based on logical, evidential and correct calculation of the incomes of the assessee and not the undue pressure tactics. The so-called paper on which a figure of Rs. 7,42,465 was written is absolutely nothing to do with any concealed investment or income of the assessee or any of the partners of the assessee-firm. In a trade and industrial environment of an enterprises which running into operations of several crores of rupees of purchases, sales, banking operations, debtors and creditors it is highly amazing that any amount written on a paper will constitute the incomes of the assessee. Moreover when this paper do not have any denotation or title or description on the top or middle or at the end of the paper. The calculation on the paper mayor may not be related to the business transaction of the assessee. If it was the concealed or undeclared incomes of the assessee or any of its partner the survey team must have taken further evidence to that regard and must have put them on statement recorded of partner, which they never did. They never asked any further question on that regard before comin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence but it cannot be said that it is conclusive. It is open to the assessee who made the admission to show that it is incorrect'. Further reliance is being placed in the matter of Nagubai Annal v. Shama Rao AIR 1956 SC 100 it was held by Hon'ble Supreme Court that 'An admission is not conclusive as to the truth of the matters stated therein. It is only a piece of evidence, the weight to be attached to which must be depend on the circumstances under which it is made. It can be shown to be erroneous or untrue'. Further reliance is being placed in the matter of Krishan Lal Shiv Chand Rai v. CIT [1973] 88 ITR 293 (Punj. Har.) it was held that 'It is an established principle of law that a party is entitled to show and prove that the admission made by him probably is in fact not correct and true'." 35. The above submissions were also referred to the Assessing Officer under section 250(4) by the CIT(A). The Assessing Officer as per his report is stated to have submitted that in regard to letter dated 21-5-2001 there is no such letter available on record and nor is there any material/noting to suggest that any such letter was filed by Shri Radha Raman Agarwal after the survey as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey never asked any further question on that regard before coming to any conclusion of treating them as the concealed income declared later on during survey operation. The script writing on the paper does not belong to any of the partner of the assessee-firm. Appellant did not declared that amount of Rs. 8,00,000 on their return of income filed before the office of the ACIT, Circle 4(1) on 31-10-2002. Appellant also did not deposit any Advance Tax on 15-9-2001, 15-12-2001 or 15-3-2002 as was said to be noted by the survey team in the forced statement of the one partner of the appellant." 39. Considering these submissions, the CIT(A) deleted the addition of Rs. 7,62,485 for the following reasons:- "(5.3) I have carefully considered the facts of the case, submissions of the AR and report of the Assessing Officer. In my opinion, the appellant deserves to succeed. The statement of Shri Radha Raman Agarwal was recorded in both the capacities of Director of M/s. Ravi Agriculture Equipment (P.) Ltd. as well as partner in appellant-firm besides as an individual. This fact is evident from the opening lines of statement recorded at the time of survey. The relevant portion of the state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance tax and not included aforesaid amount while computing the total income of the concerned assessment year. Even if we ignore the alleged letter of the appellant submitted on 21-5-2001 retracting from the surrender, there are certain other ambiguity as noted above, regarding the manner in which the statement was recorded. During the course of assessment proceedings, the Assessing Officer has not made any attempt to even verify the status in which the statement was made and entity in which the aforesaid amount was surrendered. Either during the course of surveyor during the assessment proceedings, no inquiries were made in respect of notings recorded on the aforesaid piece of paper. In fact balancing amount of the paper is Rs. 52,485 and not Rs. 7,42,485. A cursory glance clearly indicates that after crediting Rs. 7,42,485 in the aforesaid paper there are debit entry for Rs. 5,60,000 and Rs. 1,30,000. No inquiry was conducted by the Assessing Officer to ascertain the significance of these two debit entries and it was not explained why Rs. 7,42,485 was added instead of Rs. 52,465. During the course of assessment proceedings, appellant not only retracted from the surrender but also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid amount as his undisclosed income during the course of survey proceedings. (b) In case of Jayanti Lal Patel v. ACIT 23 ITR 568 the Hon'ble Rajasthan High Court has held that addition on the basis of a noting on a piece of paper cannot be sustained when it is not even in assessee's writing. The appellant's case is fully covered with aforesaid decision since the writing on the piece of paper was neither in the hand of Shri Radha Raman Agarwal or any other partner of the appellant firm. (c) In the case of Manga Metal (P.) Ltd v. ACIT 67 TTJ 247 (All.) it was held that burden is on the revenue to establish that figure appearing in the loose paper found in search constitute undisclosed income of the assessee. (d) In case of CIT v. Mrs. Devi S. Luis 96 ITR 646 it was held that in spite of admission it is incumbent on the department to establish by relevant proof that amount in question was income in hand of the assessee. It was for the department to prove positively on the basis of other material that there was concealment of income. (e) Similarly in the case of ACIT v. Staya Narain Agarwal 255 ITR 269, the assessee has given an admission that a particular amount has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e facts were also not addressed by the learned DR who has chosen to place reliance only on the Assessment Order. 42. Learned AR on the other hand place heavy reliance upon the detailed findings based upon the detailed reasons advanced before the Assessing Officer and the CIT(A). 43. We have heard the rival submissions and perused the material available on record. In the facts as they stand which have been addressed at length in the earlier part of this order which have not been assailed by the revenue we find ourselves unable to come to any contrary view. On a perusal of the reproduction of the impugned paper cognizance of which has been taken by the Assessing Officer. It is seen that the balancing figure is Rs. 52,465 and how the addition of Rs. 7,42,485 has been made has not been addressed by the revenue at all. Apart from the fact that a surrender of Rs. 8 lakhs odd was made by the partner Shri Radha Raman Agarwal, the fact that the surrender was made in the individual capacity as well as the capacity of the director. In the facts of the present case, we find ourselves in concurrence with the finding of the CIT(A) on the basis of material on record as we find no basis in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e stock difference with reference to stock register maintained by the assessee-firm. The assessee, however, showed its inability to reconcile the stock and accordingly, surrendered an amount of Rs. 3,00,000 on account of unexplained investment in the stock. Blank cheques, blank bills and other loose papers were also found. 3. During the course of assessment proceedings, the Assessing Officer required the assessee to explain difference in the stock. The assessee being unable to give any explanation stated that he had already surrendered a sum of Rs. 3,00,000. Accordingly an addition of Rs. 96,181 has been made for unexplained investment in the stock. The same stood deleted by the learned CIT (Appeals). 4. The Assessing Officer also rejected the accounts by invoking provisions of section 145(3) of the Act for the following reasons:- (i) The sales of assessee during the year under consideration have declined to Rs. 4,25,50,982 as against Rs. 5,24,62,410 when compared to the immediately preceding year. No explanation regarding decline in sales was furnished by the assessee. (ii) A large number of blank bills in the name of persons doing job work, painting etc., were found at th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was stated to have been made by Assessing Officer without any concrete basis. He, therefore, deleted the addition of Rs. 79,069 made by the Assessing Officer. Aggrieved with the decision to delete addition of Rs. 79,069, the revenue has taken following ground in appeal:- "2 That the learned Commissioner of Income-tax (Appeals)-II, Agra has erred in law and on facts in deleting the addition of Rs. 79,069 (Rs. 76,069) made on account of suppressed sales (sales estimated at Rs. 4,30,00,000 against disclosed sale of Rs. 4,25,50,982) in view of the facts that assessee could not explain blank bills and reason for low sale in comparison to preceding years." 8. The ld. Departmental Representative while assailing the order of ld. CIT (Appeals) contends that the Assessing Officer had rejected the accounts by giving valid reasons. After evaluating the entire material and facts on record, he estimated the sales at Rs. 4,30,00,000 as against sales of Rs. 4.25 crores declared by the assessee and by applying the same profit rate declared by assessee, an addition of Rs. 76,069 has been made but the ld. CIT (Appeals) without giving any basis for deleting the addition or even without making v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Reference may be had to the judgment by Bombay Tribunal in the case of Roop Niketan v. Asstt. CIT [2004] 1 SOT 739, B. Brothers Engineering Works v. Dy. CIT [2003] 78 TTJ (Ahd.) (TM) 876 and Janta Tiles v. Asstt. CIT [2000] 66 TTJ (Pune) 695. That being the position, the ld. CIT (Appeals) can be said to have erred in saying that the reason quoted by the Assessing Officer for rejecting the books of account is not justified. 11. Another reason taken by the Assessing Officer for rejecting the books of account is that the sales of the assessee have declined to Rs. 4,25,50,982 during the year under consideration as against sales of Rs. 5,24,62,410 in the immediately preceding year. The assessee offered no explanation regarding this decline. The learned CIT (Appeals), however, was persuaded with the plea of the assessee that the detailed explanation regarding the reason for decline in sale was furnished at the time of assessment proceedings and without testing the explanation or even making any reference to any such explanation, jumped to a conclusion that the reason taken for rejection of accounts is not justified. As the sales have drastically declined and coupled with the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not correct and complete and as such the rejection of accounts made under section 145(3) is also upheld. 14. The learned CIT (Appeals) has also stated in his order that the Assessing Officer after rejecting the books did not take any concrete basis for estimating the income. This is also not correct. As has already been found that there was a short stock to the extent of Rs. 3,96,181 found at the time of survey which is presumed to have been sold outside the books with gross profit earned thereon at the rate of 17.99 per cent and the short stock found being only for a period of say about 45 days, the assessee can be held to have rotated the same in the entire year thereby making more sales outside the books. Thus, after rejection of accounts, it was within the discretion of Assessing Officer to have estimated the income. Having regard to all these facts on record, the Assessing Officer thus took reasonable basis in estimating the sales at Rs. 4,30,00,000 only as against Rs. 4,25,50,982 declared by the assessee and by applying the same profit rate as declared by the assessee the addition of Rs. 79,069 so made is justified. By setting aside the order of ld. CIT (Appeals), I rest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is not warranted. 18. The Assessing Officer being not satisfied with the explanation, proceeded to make addition of Rs. 7,42,485 on account of entries in the loose paper and Rs. 20,000 on account of cash found at the time of survey. 19. This action of the Assessing Officer was assailed in appeal. The ld. CIT (Appeals) found that the statement of Shri Radha Raman Agarwal was recorded in both the capacity as director of M/s. Ravi Agricultural Equipments (P.) Ltd., as well as partner of the assessee-firm besides as an individual. The learned CIT (Appeals) on perusal of reply to question No. 3 of the statement of Shri Radha Raman Agarwal taken during the survey proceedings, found that the surrender of Rs. 3,00,000 was made in the hands of the assessee-firm. He, however, recorded a finding that the assessee's contention that aforesaid surrender was made in the individual capacity appears to be correct. He also took note that the Assessing Officer failed to establish concealment of income on the basis of any evidence or material gathered during the course of surveyor assessment proceedings indicating any unaccounted investment of the assessee-firm to the tune of Rs. 7,42,485 even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s also an admitted position that the piece of paper was recovered from the premises of the assessee and has duly been inventorised. Even though the assessee has been making contradictory explanations, the explanation filed before the authorities below reveals that the assessee in his explanation has also admitted of the fact that "this paper belongs to the supplies or purchases made by the assessee-firm." The paper so recovered from the assessee's premises was available on the record of Assessing Officer though the same is not available in the records of the Tribunal. This paper available on the record of the Assessing Officer constituted a material for the purpose of making assessment in sub-section (3) of section 143 of the Income-tax Act, 1961. Reference may be had to the judgment rendered by Hon'ble Kerala High Court in the case of Vazhakala Estate v. State of Kerala [1994] 210 ITR 451. The Assessing Officer, therefore, was justified to take into consideration for framing the assessment on that basis. After the assessee had admitted of the fact before the survey proceedings that the documents belongs to it and it had made surrender of income on that basis and also in assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t find any factual or legal justification in his action to delete the addition. His order, therefore is directed to be set aside and the matter is restored back to his file so that a proper and effective opportunity of being heard is given to the assessee to discharge the burden that stood shifted to him to explain the loose paper. After taking the evidence, the ld. CIT(A) shall take the decision afresh in accordance with law. He shall also pass a speaking order showing as to whether the amount surrendered for Rs. 3,00,000 on account of unexplained investment is taken part of this addition or otherwise the same needs to be sustained. Needless to add, the Assessing Officer shall also be given due and proper opportunity of being heard. THIRD MEMBER ORDER Per G.E. Veerabhadrappa (As a Third Member).-Since there was a difference of opinion between the learned Members who constituted Agra Bench in the case of aforesaid appeal, I was nominated as a Third Member by the President, Income-tax Appellate Tribunal, under section 255(4) of the Income-tax Act, 1961. The points of difference referred to me are as under:- "1. Whether, on the facts and findings and having regard to position o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losing stock extrapolated by utilizing the earlier year GP rate. In respect of these shortcomings, the difference between the actual and estimated cost was only claimed to be .61 per cent. Considering these facts, the ld. CIT(A) was of the view that the amount surrendered by the assessee was sufficient to cover up their discrepancy in stock and further addition was not warranted. The addition, therefore, got deleted. The revenue challenged this deletion apart from other addition before the ITAT. As regards this issue, the ld. Judicial Member found no reason to interfere with the findings of the ld. CIT(A). On this issue, although some discussion is made in the dissenting order of the Accountant Member, he has not given any finding adverse in relation to this specific addition. In fact, the question as framed before me does not contain even a reference to this. Accordingly, it is to be taken that there is no dissent in relation to this addition. Now, I deal with the points of difference referred to me. 3. Now, the first issue relates to an addition of Rs. 76,069 on account of trading addition. Before the Assessing Officer, the assessee furnished the following chart depicting sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee were not authenticated. The Assessing Officer was quite liberal in estimating the sales of only Rs. 4,25,50,982 as against Rs. 45,24,62,410 shown in the preceding year, particularly when no cogent reasons were furnished by the assessee for such a sharp decline in sales. According to him, the order of the Accountant Member deserves to be upheld. 6. The learned counsel for the assessee vehemently supported the findings of the CIT(A) and the ld. J.M. 7. Ld. DR, on the other hand, supported the order of the Assessing Officer and the ld. A.M. 8. I have carefully considered the rival contentions and gone through the impugned orders. In my view, the order of the Judicial Member requires to be upheld having regard to the facts and circumstances of the case. The assessee has shown better profit percentage, as could be seen from the chart the assessee has furnished before the Assessing Officer. Unless the department has some material to show that there was sale outside the books of account, it was not correct to reject the books of account maintained by the assessee. Mere fall in the sales does not justify the rejection of the books of account without any other cogen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... racted within five days from the date of search. The CIT(A) in fact has referred those letters to the Assessing Officer in the remand proceedings. When the assessee has retracted the statement, an addition should be supported by enough material in the possession of the department. Now looking at the paper, it has some numerical figures but does not, in any way, show that it has some relationship with some business transactions of the assessee. The paper that was taken as a material for making the addition does not conclusively establish that it pertains to the business transaction of the firm. Now, the department is making the addition as a part of unexplained investment. What sort of investment the department has found is also not clear from the assessment order. The addition, in sum and substance, made by the department is clearly not supported by any material, which can point out to unexplained investment outside the books of the assessee. According to me, the addition has been correctly deleted by the CIT(A) in the light of the principle laid down by the Supreme Court in the case of Pullangode Rubber Produce Co. Ltd. The ld. JM. has correctly affirmed the finding of the CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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