TMI Blog2014 (9) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee in the CO are accordingly allowed for statistical purposes. Addition made on account of unaccounted investment in land - Held that:- Respectfully following the decision of the Tribunal in the case of Ghodawat Foods International Pvt. Ltd.[2013 (12) TMI 1672 - ITAT PUNE] where similar addition made by the Assessing Officer was deleted by the CIT(A) and the appeal filed by the revenue has been dismissed, therefore, we find no infirmity in the order of the CIT(A) deleting the addition made by the Assessing Officer on account of unaccounted payment for purchase of land. The ground raised by the revenue is accordingly dismissed. Estimated profit on suppressed turnover - unaccounted sale of Gutkha - Held that:- Since the assessee in the instant case maintains proper books of accounts which are duly audited and since no addition has been made by the excise department on account of purchases, sales or production outside books and since no incriminating documents whatsoever were either found or seized from the office or the factory premises of the assessee regarding any unaccounted purchases or sales and since the stock found at the time of search tallied with the stock as per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resumptions and surmises, however strong may be, cannot be the basis for addition in absence of any corroborative evidence. There is nothing on record to show that during the impugned assessment year the assessee has paid any extra money over and above the purchase price as recorded in the books of accounts. None of the sellers was examined by the AO. The AO has not brought on record the date of original purchase price by the sellers, date of purchase by them, date of sale to the assessee etc. It is well known that the price of vehicle decreases after it is purchased and used for some time and the value never remains constant or increase. It only decreases. In view of the above and considering the detailed order of the CIT(A) which in our opinion is a reasoned one, we find no infirmity in the same. Accordingly, the same is upheld and the ground raised by the Revenue is dismissed. Adopting the expenditure over gross receipt of agricultural income - Held that:- We find the AO in the very first paragraph has stated that the agricultural income shown by the assessee is ₹ 3,93,99,179/. However, at para 15 of the order he has stated the agricultural income declared by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re heard together and are being disposed of by this common order. ITA No.1909/PN/2012 (A.Y. 2003-04) (Revenue) : CO No.67/PN/2013 (Assessee) : 2. Ground of Appeal No.1 by the Revenue and ground of appeal No.2 of the cross objection by the assessee relate to the same issue and read as under : Ground By Revenue : 1. On the facts and in the circumstances of the case the CIT(A) erred in allowing the depreciation claim of ₹ 86,10,000/- for the A.Y. 2003-04 of the assessee on wind mill Cross Objection No.2 by the assessee : 2. The learned CIT(Appeals) erred in facts and circumstances of the case and in law in disallowing the claim of depreciation @ 80% on the total cost of the windmill by treating part of the cost as being incurred for civil works and thereby allowing depreciation @ 10% only on such costs. It be held that the entire costs of windmill, erection, foundation, infrastructure, installation etc are to be allowed depreciation @ 80% as they form a integral part of windmill by applying the functional tests. 2.1 Facts of the case in brief, are that the assessee is a company engaged in the business of manufacturing and trading in Pan Masala, Gutkha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue expenditure. The copies of the bills from Enercon (India) Pvt. Ltd., Suzlon Infrastructure Services Ltd., Suzlon Energy Ltd. were also produced. 4. Based on the arguments advanced by the assessee, and following his decision in the case of Chhapalkar Brothers for A.Y. 2008-09, the CIT(A) held that the said decision will be applicable to the case of the assessee. He held that in the case of Chhalpalhar Brothers he has determined the various components which go on to make up the case of the windmill, the details of which are as under : Sr.No. Particulars 1. Cost of wind turbine generator 2.a) Cost of component accessory (copper wound with accessories) b) Cost of component for generation of electricity supply of rotor blades c) Electrical items, components of RE device 3. Cost of tubular tower 4. Cost of work including foundation work 5. Labour related cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee on the other hand referred to the order of the Tribunal in the case of CIT Vs. Everready Investments Pvt. Ltd. vide ITA Nos.609 to 614/PN/2013 order dated 29-11-2013 and submitted that the Tribunal in the said decision has held that cost of civil work apportioned towards the erection of foundation for windmill shall be eligible for depreciation @80% and the balance of the cost shall be eligible for depreciation @10%. He accordingly submitted that this being a covered matter the ground raised by the revenue should be dismissed and the CO filed by the assessee be allowed. 7. After hearing both the sides, we find the Pune Bench of the Tribunal in the case of Everready Investments Pvt. Ltd (Supra) while deciding an identical issue has observed as under : 5. In this background, we have considered the rival submissions. It was a convergence of opinion between the assessee and the learned CIT(DR) that so far as the cost of foundation of Windmill is concerned, the same is liable to be considered as an integral part of the cost of Windmill having regard to the decision of the Pune Bench of the Tribunal in the case of Aminity Developers Builders vide ITA no. 1505/PN/2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l work is apportioned to civil work involved in the erection of foundation of Windmill/other power equipment and 40% be apportioned towards other civil works which shall be eligible for the lower rate of depreciation. The cost of civil work apportioned towards the erection of foundation for Windmill shall be eligible for depreciation @ 80% and the balance of the cost shall be eligible for depreciation @ 10%, as allowed by the Assessing Officer. The order of the CIT(A) is therefore set-aside and the Assessing Officer is directed to re-compute the allowance of depreciation accordingly. 7.1 Respectfully following the decision of the Tribunal cited (Supra) we restore the issue to the file of the AO with a direction to recompute the depreciation in the light of the direction of the Tribunal. The ground raised by the revenue as well as the ground raised by the assessee in the CO are accordingly allowed for statistical purposes. 8. Identical grounds have been taken by the Revenue in all the other appeals. The assessee has also taken similar ground in all the Cos (Ground No.2) and ground of appeal No.3 in ITA No.1986/PN/2012. Following our reasonings given in the preceding paras, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had purchased land during the year the price of which has been shown in the books at ₹ 9,72,470/-. He, therefore, made addition of equivalent amount on the ground that the assessee must have paid the equivalent amount in cash as on money . 12. Before the CIT(A) it was argued that the Assessing Officer has not brought any evidence on record to substantiate that the assessee had paid extra money over and above what is stated to have been paid as reflected in the books of account. There were no incriminating documents in this regard found during the course of search. The Assessing Officer, based on the transactions in case of other firms/individual groups, which had no bearing to the assessee s case has made the addition. It was argued that the land owner in question was neither summoned during the assessment proceedings nor the statement recorded of the land owner was brought to the notice of the assessee. It was contended that the assessee has not paid anything over and above the declared sale price. It was submitted that one land owner by name Shri Pandurang D. Gore had confirmed in his statement that he has received ₹ 1 lakh in cash from the assessee i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his or her own name. There is no presumption in law that there has to be an unaccounted transaction when there is a dealing in real estate. It has to be noted that search and seizure was conducted on the premises of the appellant and no document or evidence whatsoever was found which would indicate unaccounted transactions in land dealing between the members of the Ghodawat group and the sellers. It is only the statement made by some of the landlords who had sold lands to the Ghodawat group which implicated some members of the Ghodawat group of indulging in transactions of on money payments. In the absence of any documentary evidence, the oral evidence of landlords in other cases cannot be used to justify an addition of on money payment in the hands of the appellant. The assessing officer has not specified the relevant assessment year in respect of which one seller had confirmed that he had received a sum over and above the documented price in the assessment orders for the years in which this addition is made. Hence, he is directed to find out the relevant assessment year for which the statement was made and retain the addition to that extent in the concerned assessment year. Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him to make these additions. It was also contended on behalf of assessee, there was no incriminating document during the course of search in this regard. The Assessing Officer has referred to transactions made in cases of other firm / individuals of the group, which has no bearing to the assessee's case. The assessee contended that it had not paid anything more than the sale deed price for purchase of the land and hence, the addition was not justified. The land owners from whom land was purchased in the previous years relevant to assessment years 2005-06, 2007-08, 2008-09 and 2009-10 were not produced as witness for cross examination. The Assessing Officer could have used the powers under section 131 to enforce the attendance of witness, but he did not chose to do so. Sixteen land owners in the Trust cases, one land owner in the case of Shri Sanjay Ghodawat, individual and Ghodawat Industries India Pvt. Ltd. and three land owners in the case of Ghodawat Foods Industry Pvt. Ltd. has stated that they had received monies over and above the documented price. The Assessing Officer concluded that the assessee has also paid an equal amount of unaccounted cash, over and above the pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e by the Assessing Officer was deleted by the CIT(A) and the appeal filed by the revenue has been dismissed, therefore, we find no infirmity in the order of the CIT(A) deleting the addition made by the Assessing Officer on account of unaccounted payment for purchase of land. The ground raised by the revenue is accordingly dismissed. 16.2 Identical grounds have been taken by the Revenue in all the appeals except appeal for A.Y. 2008-09. Following our reasonings in the preceding paragraphs, the grounds raised by the Revenue on this issue in the above appeals are dismissed. 17. Ground of appeal No.3 by the Revenue reads as under : On the facts and in the circumstances of the case the CIT(A) erred in deleting the additions of ₹ 20,84,85,103/- made by the AO in respect of unaccounted sale of Gutkha for A.Y. 2003-04. (Rs.20,84,85,103/- each for A.Y. 2004-05 to 2007-08, ₹ 20,85,23,425/- for A.Y. 2008-09 and ₹ 39,40,36,751/- for A.Y. 2009-10) 17.1 As mentioned earlier, the assessee is a company engaged in the business of manufacturing and trading in Pan Masala, Gutkha, trading in shares and also engaged in the business of construction and generation of po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me to the conclusion that the said statement clearly brings out a case that no primary basic documents are maintained it its factory premises in respect of production of Gutkha and Pan masala. Therefore, in absence of such primary basic records, the Assessing Officer was of the opinion that it is not practically possible for the assessing authorities to know the opening and closing stock of the Gutkha and Pan masala and therefore the correct profit out of production and sale of Gutkha and Pan masala activities cannot be determined in the absence of relevant details. Therefore, he was of the opinion that there is no other alternative but to adhere to the policy followed by the Central Excise for levy of Excise duty on the basis of production capacity of each machine installed in the factory premises. He noted that the records found during the course of search reveal that the Central Excise Authorities have charged the excise duty on production of Gutkha and Pan masala on the basis of production capacity of power machines installed in the factory premises. The search party in the course of search action followed the method adopted by the Excise department for levy of Excise duty on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd and impounded from these C F distributors for Gutkha Pan masala clearly reveal that the assessee was indulging in suppression of sale of gutkha and pan masala outside books through these C F distributors. He analysed partywise findings of the C F Agents. 17.8 He noted that M/s. Shree Ambika Enterprises, Mumbai, proprietor Shri Dharmesh Patel was appointed as C F for distribution of Gutkha and Pan masala manufactured by GIIPL. Survey action u/s.133A was carried on 05-02-2009 and his statement was recorded. It was seen that the sales tax department had already conducted a search and survey operation at the business premises of M/s. Shree Ambika Enterprises, proprietor Shri Dharmesh Patel. The Assessing Officer after obtaining copies of documents seized by the sales tax department analysed the same and noted that Shree Ambika Enterprises has made substantial sales to its 25 distributors spread over in the areas of Thane, Mumbai and Vashi in cash which are outside books during F.Y. 2006-07 to 2008-09 and the cash received has admittedly been passed on to Shri Sanjay Ghodawat through one Mr. Mahesh, one of the employees of GIIPL, who collected cash in Mumbai on day-to-day basis. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that a survey action u/s.133A was also conducted at the business premises of M/s. Siddeshwar Agencies, Solapur, proprietor Shri Udhav Shankar Kharge (HUF), who is one of the distributors of Gutkha and Pan masala of GIIPL. During the said survey various loose papers were impounded. He noted that as per the entries depicted on pages 23 to 31 of loose paper, Bundle No.2 it was found that total sales of ₹ 66,51,159/- on account of sale of Star and Chakde Gutkha and Pan masala were not recorded in regular books of accounts. This fact was also confessed by Shri Udhav Shankar Kharge in his statement recorded wherein he has categorically owned up the papers and documents and the notings in the diary. The Assessing Officer referred to the statement recorded during the survey, the documents impounded during such survey and noted that the suppressed sale of gutkha and pan masala comes to ₹ 66 lakhs for a period of 2 months of the F.Y. 2008-09. Relying on the decision of the Hon ble Supreme Court in the case of H.M. Esufali H.M. Abdulali reported in 90 ITR 271 the Assessing Officer estimated the suppressed sales for F.Y. 2007-08 at ₹ 3,96,00,000/-. 17.11 Since the books ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded sales. The gross profit attributable to total sales is taxable in the respective financial years as undisclosed income of Ghodawat Industries India Pvt. Ltd. The actual Gross Profit ratio as per the accounts of the assessee company for the F Y 2005-06 to F Y 2007-08 is as under: F.Y. Sales (Amount in Rs.) Gross Profit GP% 2005-06 1054456321 83699818 7.93 2006-07 910386077 45525460 5.00 2007-08 1254020055 97244366 7.75 9.8 The above gross profit ratio includes the excise duty levied on manufacturing of gutkha pan-masala sold by the assessee company in the respective years. It is, however, significant to mention here that no excise duty has been paid or levied in respect of unrecorded sales in cash, quantified at ₹ 265,97,33,413/-. Therefore, while arriving at the Gross Profit ratio on the unrecorded sales, actual excise duty levied on gutkha and pan-masala included in the sales is pock ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,84,85,103 5 2006-07 37,99,61,916 *20,84,85,103 6 2007-08 38,00,31,758 20,85,23,425 7 2008-09 71,81,27,850 39,40,36,751 18. Before the CIT(A) it was submitted that the assessee has maintained records to show the production and stock of Gutkha and Pan Masala. It was submitted that the Excise Department had verified the stock registers during the year 2007-08 and 2008-09 on different dates and had confirmed that the production on such dates were verified and found correct and the excise records are a part of the seized document. The assessee submitted that during the course of search the stock of raw material and finished goods found tallied with the stock records for which there was no seizure. The assessee had also not made any declaration to this effect. Further, during the course of search no documents / evidence were found from the premises of the assessee indicating sales/purchase/production made outside the books of account. Therefore, the AO was not jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee to pay Excise as was paid prior to 11-09-2008 the assessee did not pay Excise duty on the basis of operational packing machines. This fact was also brought to the notice of the AO. 18.2 As regard the deposition of some of the workers that the capacity of packing machines was 75 to 80 pouches per minute the assessee submitted that the capacity of packing machines and that of production capacity is different and that these were theoretical calculations. The Excise and production records found and seized during search proceedings were verified during assessment proceedings and no discrepancy was found. 18.3 So far as the calculation by the AO of the number of pouches that would be produced on the basis of the lamination consumption register, it was submitted that this was purely a theoretical calculation. It was argued that since the thickness of lamination varied for each lot, therefore, the number of pouches produced could not be determined on the basis of weight of lamination. Without prejudice to the above, it was submitted that even if it is assumed that pouches produced are more, it cannot be assumed that they were sold by filling finished material in it in absence of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchases from the assessee are concerned they have received bills for each supply and payment thereof was made by cheque. It was accordingly submitted that the assessee is not involved in making any unrecorded sales. 18.8 So far as estimation of sales for F.Y. 2008-09 is concerned, the assessee submitted that during the course of search no document/ material was found to suggest that the company was indulging in making purchases or sales outside the books of account. It was submitted that the products manufactured by the company are liable to Excise duty and therefore all the records of purchases, production, sales and consumption were maintained. These records were verified by the Assessing Officer and the Excise officials also conduct regular audit. It was submitted that the factory is under active supervision and surveillance by the Excise Department. Further, no discrepancies were found in the records seized during the search proceedings. There was no case pending against the company for Excise duty violation. It was argued that the search took place on 04-02-2009 but estimated sales were worked out for the post search period also, i.e. 05-02- 2009 to 31-03-2009. 18.9 As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al vs. State of Bihar (1957) 8 STC 770 (SC) 20. Based on the arguments made by the assessee the Ld.CIT(A) called for a remand report from the AO who reiterated his earlier findings. The salient features of the remand report by the AO as brought out by the Ld.CIT(A) at para 93 of his order read as under : 93. The above submission of the appellant was remanded to the Assessing Officer for his comments vide this office letter dated 27/10/2011. The Assessing Officer in his remand report dated 14/03/2012 has not deviated from his decisions taken during assessment on the objections raised by the appellant. The points brought out in the remand report are briefly that i) Shri Sanjay Ghodawat, Chairman and M.D. of the appellant had clearly stated that no primary records like shift, production issued from the stores dispatch of finished products etc., were being maintained at the factory. ii) The Excise department has charged excise duty on production of gutkha pouches on the basis of machines put to use and not on the basis of production recorded in the books of manufacturer. The excise duty was levied per machine on the basis of manufacturing capacity of a particular machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by a change in law or by operation of a decision of the higher jurisdictional courts or the Supreme Court. The appellant has pointed out that in their case, assessment under section 143(3) was completed for assessment years 2003-04 to 2006-07 on various dates. It was submitted that during the course of regular assessment proceedings various information was called for in respect of raw material consumption, production and consumption of laminates. Questions were also asked regarding electricity consumption in the manufacturing process. The appellant submitted that all the details called for was submitted before the assessing officer and after having satisfied himself about the veracity of the statements produced, no addition was made in all these years on account of suppressed production or unaccounted sales or purchases. The appellant stated that their books of account have been audited for all the years that form 3CD contains all the quantitative details of raw material consumption, production, sales, opening and closing stock and that they were examined in depth during the process of assessment under section 143(3) in all the above assessment years. The appellant reiterated th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns regarding consumption of raw material production, number of pouches produced and lamination used was called for vide the questionnaire sent along with notice under section 142(1) dated 21/09/2005 for assessment year 2003-04. The appellant provided quantitative details of production of gutkha, pan masala and other allied products manufactured by it. Similarly details of all sales and consumption of raw materials was provided. The aspect of production and sales was examined in depth inasmuch as even the ratio of consumption of raw material for every pouch of finished product and consumption of laminates per pouch were also examined. For all the four years, the assessing officer was satisfied about the genuineness of the production results and the sales as well as consumption of raw material as reflected in the book results. Hence, no addition on account of suppressed production, sales and consumption of raw material or suppressed gross profits was made in all the four years. Under these circumstances, the matter stood concluded at the time of original assessments completed under section 143(3). Since nothing incriminating has been found in the search and seizure proceedings in res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iness results of the appellant cannot be deduced. In this respect, the assessing officer has completely disregarded the fact that no evidence whatsoever reflecting suppressed production or sales and purchases outside the books of account were found during the course of search and seizure. It is a fact that the raw material and finished products found at the factory was reconciled with the bills and vouchers present in the head office and nothing incriminating was found there. Therefore, the only reason for rejection of books of account as can be seen from the order is ........... trend emerged (sic) from the impounded papers as regards the volume of suppression of sales in the F.Y. 2006-07 to 2008-09, it cannot be said that the assessee company has not suppressed its sales in the earlier F. Ys. Thereafter the assessing officer has concluded on the basis of the decision of H M Esufali H.M. Abdulali in 90 ITR 271(SC) to state that ........ the suppression of sales in the earlier years for i.e. for the F. Ys.2002-03 to 2005-06 falling in the search period are also extrapolated after adopting the reasonable ratio of actual suppression of sale of gutkha and pan masala detected in the F. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were made in cash and that the cash collected out of supply to distributors was handed over to Shri Sanjay Ghodawat through one Shri Mahesh. According to the statement taken Shri Dharmesh Patel was appointed as the C F agent for gutkha and pan masala for Mumbai and Thane region. Shri Dharmesh Patel also admitted that he was not dealing in any other brands of gutkha and pan masala. Shri Dharmesh Patel confirmed that the Sales-tax department had seized the regular books of accounts recorded in the CPU and various loose papers and other documents on 20/01/2009. He stated that the data regarding gutkha business was from February 2006 onwards i.e. the year and time when distribution of gutkha and pan masala for the appellant started. Thereafter Shri Dharmesh Patel gave the modus operandi of recording various transactions as per the material seized by the Sale-tax department. It appears that Shri Dharmesh Patel had categorically stated in answer to question no. 16 that the entries in the loose papers, documents and registers pertaining to Ghodwatat Industries Pvt. Ltd. was not recorded by him in the regular books of account. This implies that all the transactions which were confessed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsons were taken and on the basis of which unaccounted, suppressed production was calculated. However, the assessing officer was unable to supply me with these evidences as well. It will not be out of place over here to mention that Shri Dharmesh Patel had immediately retracted from the statement given to the Investigation Wing on 02/04/2009. The retraction was made in the form of an affidavit filed before a Notary on 04/04/2009. Subsequently, Shri Dharmesh Patel had also retracted from the statement by way of an affidavit filed before the Metropolitan Magistrate on 08/04/2009, the scanned copy of which is as under : 103. It is very clear that the statement made on 02/04/2009 was immediately retracted by Shri Dharmesh Patel on 04/04/2009 before a Notary and again on 08/04/2009 before the Metropolitan Magistrate. Such retractions cannot be taken lightly, especially in light of the fact that the appellant had stated that he had signed on the statement, the contents of which was not known or explained to him. During the course of cross examination, Shri Dharmesh Patel also informed that the said affidavit was supplied to the Investigation Wing by post as well as by fax on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... threat it must be rejected. On retraction, earlier stated facts or admission, lose their effect as binding evidence and it is not permissible for any authority to conclude a matter on the basis of such earlier statement alone. At the same time, bald retractions of earlier admissions will not be enough and even after retraction such statements cannot automatically become nullities. Merely because a statement is retracted, it cannot become as involuntary or unlawfully obtained. For any retraction to be successful the retractor must show as to how earlier recorded statements do not state the true facts or that there was coercion, inducement or threat while recording his earlier statements. Retraction of earlier admitted facts puts the Assessing Officer on a back foot and he is not supposed to accept the retraction without probe or cross-examination. A retraction to have any evidentiary value must preferably be in a statement denying the earlier stated facts and explaining the reasons for making the contra statement earlier and giving substituted facts in support of retraction. An effective and credible retraction is the one which is intimated to the income-tax authority at the earlies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their affidavits later on, if no cross examination with reference to the statements made in the affidavits is done. 111. The accepted position of admissions or confessions made in the statements recorded during search or survey, without there being any other evidence to support such admissions, is that they can successfully be made use of to assess the income, unless they are proved to be involuntary or are proved to have been taken under duress, coercion, misconception, or are patently wrong, or not backed by evidence etc. Therefore, we have to examine the statements of Shri Patel, Shri Shaikh and Shri Kharge in these milieus. We have to examine the statements to find out- 1. If they were obtained by coercion, inducement or threat; or 2. The statement was made under misconception of fact or of law; or 3. The statement is patently wrong; or 4. The statement is not backed by evidences or that the evidences at hand are in contradistinction and stand juxtaposed to the admitted facts; and whether 5. There is a retraction, and if so then whether the retraction can be accepted or not. 112. Law on admission and retraction is well settled. The Hon'ble Tribunal i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed principle that in case evidence is in the form of statement which is sought to be utilized against the appellant pertains to an ex-parte statement of witness, the same cannot be unilaterally utilized against the appellant without the witness being put to cross examination. In the case of Jaikisan R. Agarwal v. Asstt. CIT [2000] 66 TTJ 704 (Pune) it was held that in a case where no document was seized in course of a search showing payment of extra consideration for purchase of a property, whether additions can be made on the basis of statement recorded from third parties. It was held that any statement recorded at the back of the appellant has no evidentiary value and in the absence of any evidence seized in course of search indicating payment of extra consideration over and above what is mentioned in the document, the addition cannot be sustained. The decision- 12. As regards the addition of Rs . 1,36,470 is concerned, the same has been made by the Assessing Officer on the basis of statements of the vendors recorded at the back of the assessee. Such statements recorded at the back of the assessee have no evidentiary value in the eyes of law. Later on, when the assessee insist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usal of the cross examination conducted by the assessing officer reveals that after retraction of the statements made before the Investigation Wing, Shri Dharmesh Patel had categorically stated that apart from the purchasing of gutkha and pan masala from the Kotharis of Kanpur and from G M Joshi group, he had never given a statement that he was a C F agent of the appellant. He further stated that all the goods purchased from Ghodawat Industries (India) Pvt. Ltd. are accompanied with the bill and the payments are made by cheque only. He further pointed out that contrary to what was recorded in the statement recorded on 02/04/2009, the Sales-tax department has also scrutinized the loose papers, registers and other documents seized by them on 20/01/2009. They have, after the close scrutiny, held him to be liable to pay sales-tax of ₹ 29.15 lakhs on unaccounted sales of ₹ 233.25 lakhs only during the financial year 2008-09. This unaccounted sales was in respect of his outside Maharashtra State purchases and the show cause notice was in respect of OMS sales for the financial year 2008-09 only. He stated that he had included the above profits in his return filed for the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y earlier years to find out the quantum of suppressed sales. This formula was using the average weight of lamination per pouch to arrive at the suppressed sales figure. According to this formula, the suppressed sales was to the tune of ₹ 4,17,26,141/-. However, the income was computed by applying the multiplier of 54.87% on average sales, as for financial year 2002-03 to 2005-06, after excluding excise to arrive at a figure of ₹ 20,84,85,103/-. For the financial year 2007-08, the material collected by the Sales-tax department indicated unaccounted sales of ₹ 26,70,26,465/- during a ten months period. The assessing officer applied the ratio of decision in H M Esufali H M Abdulali (supra) to estimate the sales at ₹ 32,04,31,758/-. For the financial year 2008-09, the unaccounted sales was worked out on the same basis as in financial years 2006-07 and 2007-08 at ₹ 32,92,63,925/- for six months period which was converted into ₹ 65,85,27,850/- for the whole year. Thereafter the assessing officer embarked upon an attempt to find out the ratio of suppressed sales of gutkha and pan masala. During the financial years 2007-08 and 2008-09 the assessing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pacity of installed machinery. Instead, excise is payable on actual production as per the interim order dated 11/07/2008 issued in favour of the appellant in Writ Petition filed in Karnataka High Court, Circuit Branch at Dharwad. This is ample proof of the fact that all manufacturing records are vetted by the excise department. They have not made out any case of suppressed production till date. (e) The appellant has also drawn my attention to the excise records available with the Department. This excise records are for the period 17/11/2007 to 24/02/2008 i.e. financial year 2007-08. They are Mazhar reports of excise officials of various dates which show the stock of raw materials, finished goods, inward of raw and packing materials received, the invoice numbers against which they have been received, the clearances and final stock taken on these dates. These Mazhar reports of the Excise department are for various dates. Mazhar Report of Excise official 1. 01/12/2007 2. 02/12/2007 3. 03/12/2007 4. 11/01/2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 01/02/2008 4 12/02/2008 5 13/02/2008 6 14/02/2008 7 16/02/2008 8 21/02/2008 9 22/02/2008 10 23/02/2008 Lagaan gutkha 1 24/11/2007 2 27/11/2007 3 28/11/2007 4 29/11/2007 5 30/11/2007 6 01/12/2007 7 02/12/2007 8 03/12/2007 9 04/12/2007 10 12/01/2008 11 14/01/2008 12 15/01/2008 13 23/01/2008 14 01/02/2008 15 12/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 24/01/2008 3 01/02/2008 Chak De (73B No.) 1 24/11/2007 2 28/11/2007 3 29/11/2007 4 30/11/2007 5 02/12/2007 6 04/12/2007 7 05/12/2007 8 12/01/2008 9 14/01/2008 10 15/01/2008 11 22/01/2008 12 01/02/2008 13 12/02/2008 14 13/02/2008 15 14/02/2008 16 15/02/2008 17 16/02/2008 18 19/02/2008 19 21/02/2008 20 22/02/2008 21 23/02 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e weight of lamination used for every pouch produced by the appellant during the financial year 2006-07. In the absence of a scientific method of determining the consumption of lamination in production per pouch, it is not possible to concur with the values of weight of the pouches adopted by the assessing officer to infer that lamination per pouch was consumed in the range of 0.326 to 0.344 gms. The entire exercise is based on armchair investigation without any supporting evidences. This methodology cannot be adopted for finding out the suppressed income on account of suppressed sales on the basis of imaginary consumption of lamination per pouch during the financial year 2006-07. In fact, nothing has been brought on record to suggest that there are empirical evidences pointing towards the overstatement in consumption of lamination / pouch. 121. I have already held on the basis of various case laws and extant position in law that in the absence of any evidence to the contrary, third party statements cannot be relied upon to make any additions especially of the kind that has been made in the appellant's case. The additions are arbitrary in nature and they are based on surmise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of turnover pertaining to Shri Dharmesh Patel. 122. In financial years 2007-08 and 2008-09 the assessing officer has also made an addition of ₹ 2 crores on account of transactions with one Shri Kutubuddhin R Shaikh of Shaikh Traders, Satara. During the. course of survey conducted on Shaikh Traders on 04/02/2009, the deponent made a confessional statement that he had transacted in goods of the appellant between 01/04/2008 to 03/02/2009 (answer to question no. 16 reproduced on pages 35 and 36 of the assessment order for 2003-04) which were not recorded in his books of account and which was paid over to one Shri Datta on behalf of the company i.e. the appellant. The total amount involved in cash was ₹ 24,82,196/-. The assessing officer incorrectly stated that suppressed sales of gutkha and pan masala are to the tune of ₹ 50 lakhs during the period of three months. The deponent has stated that goods worth around ₹ 25 lakhs were purchased between 01/04/2008 to 01/12/2008 and another ₹ 24,82,196/- between 02/12/2008 to 03/02/2009. There is no evidence of any cash purchases by Shri Shaikh between 01/04/2008 to 01/12/2008 and after 03/02/2009. Hence, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given the product of Ghodawat Industries (India) Pvt. Ltd. in cash to him. The deponent did not agree to the question posed in reference to the statement given by him during the course of cross-examination that Shri Datta was not employee of the appellant, is incorrect. So, apart from the examination by the Investigation Wing, there is a clear-cut statement of the deponent retracting from his earlier statement that he had made cash purchases from Ghodawat Industries (India) Pvt. Ltd. Since there are no further questions on this issue during the cross-cross-examination, the original statement does not hold much value as explained in the case of Jaikisan R. Agarwal v. Asstt. CIT (supra). Under these circumstances, the suppressed sales in the financial year 2007-08 and 2008-09 estimated at ₹ 2 crores is deleted. 124. Additions made on account of statement given by Udhav S Kharge (HUF), Proprietor, M/s Siddeshwar Agencies, Solapur : A survey was also conducted on the premises of M/s Siddeshwar Agencies, Solapur and Ichalkaranji. The statements of Shri Udhav Kharge were recorded on 14/02/2009 and 27/02/2009. In the statement, Shri Udhav Kharge had accepted that he had made a t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant records of purchase of raw materials with the onward details of such materials at factory premises and details of finished and semi finished products of gutkha and pan masala and outward details of such finished products from factory premises are neither maintained nor those were found during the course of search. She submitted that the records found during the search revealed that the central excise authorities have charged the excise duty on production of gutkha and pan masala on the basis of production capacity of the machines installed in the factory premises. The statements recorded from some of the workers of the factory conform that the capacity of each machine is production of 75 to 80 pouches of gutkha and pan masala per minute. Similarly, the statement of C F agents also conclusively prove that the assessee was indulging in sale of goods outside books of accounts. Under these circumstances the Assessing Officer was fully justified in extrapolating the sales for the preceding years and estimation of sales and profit thereon for all the years. Apart from the various decisions relied on by the Assessing Officer the Ld. Departmental Representative also relied on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings the assessee had submitted all the details like month-wise production, consumption of raw material, machines being put to use on the basis of the data being submitted to the excise department etc. The assessee has also submitted the details of the electricity units consumed along with the connected load and power of the respective machines. The department has also carried out the survey at the factory premises on 01-1-2010 to ascertain the electricity consumed, connected load and power rating of the machines. However, no discrepancies were brought to the notice of the assessee till the completion of the assessment. Even during the course of search, no incriminating documents were seized from the premises of the assessee and no unaccounted purchase bills or sale bills in the factory or office premises were found. He submitted that the audit report prepared u/s.44AB of the I.T. Act gives the quantitative details of raw materials purchased and consumed and its closing stock in the tabular form. If no records were maintained, then it would not have been possible to give such details as required under the I.T. Act. u/s.44AB. Neither the search party during search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statement of the C F agents are concerned, he submitted that the statement of Shri Dharmesh Patel, Proprietor of M/s. Ambika Enterprises, Mumbai was recorded by the Investigation wing during the search proceedings on 02-04- 2009. In this case, a search was conducted by the sales tax department in his premises on 20-01-2009 and the survey conducted by the Income-tax department was on 05-02-2009. He submitted that the above firm was appointed as a dealer from February 2006 and was not appointed as C F agent. 23.3 So far as the statement recorded on 02-04-2009 is concerned, he submitted that Shri Dharmesh Patel vide his affidavit dated 04-04-2009 had retracted from the statement. In the cross examination during the course of assessment proceedings Shri Dharmesh patel had categorically denied to have any unaccounted transactions with Ghodawat Industries Pvt. Ltd. In the cross examination, he had also admitted that apart from gutkha purchased from GIIPL he is purchasing gutkha from other manufacturers also. Referring to the show cause notice dated 12-03-2009 received by him from the sales tax department after the scrutiny of the seized records he had submitted a copy of the show ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lapur is concerned, he submitted that during the course of survey on 14-02-2009 it was found that sale of Star, Chakde gutkha and pan masala to the tune of ₹ 66,51,159/- was not recorded in the books of accounts for which the firm had offered gross profit of 3.66% of the undisclosed sale and investment in unaccounted business of ₹ 7.50 lakhs as undisclosed income. He submitted that the said party in his statement recorded at the time of survey as well as during the course of cross examination had never stated that the unrecorded sales made by it are out of unrecorded purchases from Ghodawat Industries Pvt. Ltd. He submitted that the said person had clearly stated in the statement that the purchases for the unrecorded sales were made in cash from the local market and as far as purchases from GIIPL are concerned they have received the bills for each and every supply and payments thereof were made by cheque. So this statement at the time of survey as well as at the time of the assessment proceedings clearly show that the assessee company is not involved in making any unrecorded sales. 23.6 So far as estimation of sales for A.Y. 2007-08 and 2008-09 are concerned he submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that no addition on account of unaccounted sale of Gutkha is warranted and therefore all the appeals filed by the Revenue on this issue have to be dismissed and the addition sustained by the CIT(A) during A.Y. 2009-10 should be deleted and the ground raised by the assessee on this issue should be allowed. 24. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. We find in the instant case the Assessing Officer made addition of ₹ 20,84,85,103/- on the basis of estimated profit @54.87% on the suppressed sale of ₹ 37,99,61,916/- for A.Y. 2003-04. Uniform additions have been made by the Assessing Officer for A.Yrs. 2004-05 to 2007-08. Similarly, he made addition of ₹ 20,85,23,425/- for A.Y. 2008-09 and ₹ 39,40,36,751/- for A.Y. 2009-10. The addition for the impugned assessment year as well as for A.Yrs. 2004-05 to 2007-08 were made on the basis of extrapolation /estimation of income on the basis of suppressed sales determined by him for the A.Y. 2007-08. The same was on the bas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found and seized. No unaccounted purchase bill or sale bill either in the factory premises or in the office premises was found or seized during the course of search. Further, the submission of the assessee that excise duty during A.Y. 2009-10 was on Advalorem basis and on actual despatches and from 01-07-2008 the excise duty was sought to be levied on the number of operational packing machines used and the Hon ble High Court vide order dated 11- 07-2008 had granted interim stay to the assessee staying the levy of excise on operational packing machines and directing the assessee to pay excise duty as was paid prior to 01-07-2008 and therefore the assessee was not paying excise duty on the basis of operational packing machines used could not be controverted by the Ld. Departmental Representative. 24.3 We find merit in the submission of the Ld. Counsel for the assessee that the thickness of lamination changes from lot to lot and therefore weight of lamination cannot be the basis for determining the number of pouches produced. So far as the statement of Shri Dharmesh Patil, proprietor of M/s. Ambika Enterprises, Mumbai is concerned, we find although the Assessing Officer made his st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agent acts being a representative of the principle therefore there cannot be any purchase and sale in the name of the agent. The Assessing Officer adopted the GP rate admitted by the Assessee on its business of Trade which is not permitted to be adopted for the income being commission of C F Agent. Though the assessee denied that he is C F Agent of M/s Godhwat Industries, however the Assessing Officer proceeded on the basis that assessee is C F Agent. 9. The Assessing Officer worked out unaccounted sale for 10 months ostensibly on the reason that the search was conducted by the Sales Tax Department on 20th January. Therefore the 10 months sale was worked out from the April 2007 to January. 2008. But it is material to note that the search was conducted on 20th January.2009 and not on 20th Janyary,2008, therefore the record found during the search cannot be said to be upto to 20th January,2008 so that the unaccounted sale on the basis of that record can be worked out upto 20th January,2008. It. appears that the Assessing Officer took this clue of 10 months from the show case notice to the Sales Tax Department wherein the proposed unaccounted sale was to be taxed for a 10 mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sale for 10 months w.e.f. 01.04.2008 till the date of search i.e. 20.01.2009 which is obvious because it could be at the best up to the date of search. But when the Assessing Officer attempted to make addition of the unaccounted sale for the assessment year 2008-09 the same is not contemporaneous to the period which the addition is made by the Sales Tax Department on the basis of same seized material. Further it is not unsustainable as to how only 10 months sale has been worked out by the Assessing Officer and remaining two months was projected when the search was on 20th. January.2009 and there is no question of seized material to be considered only upto 20th January.2008. This clearly shows a serious lacuna in the assessment order and the casual approach of the Assessing Officer without application of mind. It creates a serious doubt on the action of the Assessing Officer because on the basis of the same seized material the Sales Tax Department has made an addition for unaccounted sale of ₹ 2.33 Crores to be taxed for the assessment year 2009-10, then how on the basis of same material the Assessing Officer has made the addition for the assessment year 2008-09. Keeping in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s found in the possession or control of any person in the course of a search under section 132 [or survey under section 133A], it may, in any proceeding under this Act, be presumed- (i) that such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person's handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.] [(2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of subsection (1) shall apply as if such books of account, other documents or assets which had been taken in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further the primary evidence to show that the requisitioned record belongs and assessee is the Panchnama if any drawn by Sales Tax Department. Assessing Officer did not lay hand to any such Panchnama to prove that said record was seized from the possession of the assessee. In view of the fact that the Sales Tax Department has arrived at a different conclusion to that of the Assessing Officer while appreciating the material in question, then it . becomes necessary to examine the material/evidence on the basis of which the Assessing Officer has given the finding. Since the evidence in question was not provided to the assessee and the Revenue has also not produce the same before us, therefore we are unable to approve the view of the authorities below which is contradictory to the view of the Sales Tax Department. 14. In view of the above discussion and in the fact and circumstances of the case we set-aside the orders of the authorities below qua this issue and delete the addition of estimated GP towards unaccounted sales. 24.4 So far as the statement of other 2 C F agents are concerned, we find they have categorically denied any unaccounted transaction with the assessee and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder. Since the income on account of suppressed sale has been deleted by the Tribunal in the hands of Shri Dharmesh Patel, therefore, there is no question of any unaccounted sale by the assessee to Shri Dharmesh Patel. Accordingly, the grounds raised by the assessee for the A.Y. 2009-10 is allowed. 25. Ground of appeal No.4 by the Revenue reads as under : 4. On the facts and in the circumstances of the case the CIT(A) erred in deleting addition of ₹ 5 crores made for the A.Y. 2003-04 on account of working capital employed to run unaccounted business of gutkha . (Similar amount for A.Y. 2009-10). 25.1 The Assessing Officer has discussed the issue at para 11 (page 42) of the assessment order. According to him although no evidence of unaccounted purchases were found and seized either in the course of search or during post search enquiries, however, it is clear that the assessee was running a parallel unaccounted business in view of the evidences of suppressed sales of Gutkha and Pan Masala detected in F.Yrs. 2006-07 to 2008-09. He therefore was of the opinion that for running the parallel unaccounted business assessee requires working capital. Considering the turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds as under : 5. On the facts and in the circumstances of the case the CIT(A) erred in not accepting the rejection of books of accounts u/s.145 of the Act, by the AO for the A.Y. 2003-04 . 29.1 Facts of the case, in brief, are that the AO during the course of assessment proceedings examined the books of accounts vis- -vis the seized documents, statement recorded from various persons and came to the conclusion that the books of account maintained by the assessee do not give true and correct picture of the business since the assessee was indulging in unaccounted business outside books of accounts. Therefore, the AO was not satisfied with the correctness and completeness of the books and therefore he rejected the books u/s.145(3). 30. In appeal the Ld.CIT(A) held that the AO was not right in rejecting the books of accounts u/s.145 for the all the years under consideration by observing as under : 126. The assessing officer has rejected the books of account of the appellant for all the assessment years. Books of accounts ought to be rejected if some discrepancy is found in what is recorded in the accounts. In the instant case, despite the search and seizure, nothing has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tify the rejection. 31.1 It has been held in various judicial decisions that before rejecting the books of accounts the AO must record a clear finding that correct profit cannot be determined from the method of accounting adopted. The Hon ble Delhi High Court in the case of CIT Vs. Poonam Rani reported in 326 ITR 323 and as relied on by the Ld. counsel for the assessee has observed as under (Short Notes) : The assessee was engaged in the business of manufacturing copper wire. For the assessment year 2003-04, the assessee filed a return, declaring gross profit at the rate of 1.4 per cent as against gross profit rate of 5.91 per cent for the preceding year. The assessee contended that the fall in gross profit rate was due to increase in the purchase price. He also noticed that the weight of finished products declared by the assessee was 3,19,264 kgs. As against the weight of raw material, which was declared as 3,11,578 kgs. The assessee submitted that after drawing wire, the process goes on to put the wire for enamelling, as a result of which the weight of the wire increased by 2-3 per cent. The assessing Officer felt that in the absence of adequate supporting evidence, the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not have been a ground to reject the accounts invoking section 145(3) of the Act. There was no finding that the actual cost of the raw material or the actual cost of processing carried out purchased by the assessee was less than what was declared in the account books. There was no finding by the Assessing Officer that the actual quantity of the finished product produced by the assessee was more than what it was shown in the account books or that the finished product was sold by the assessee at a price higher than what was declared in the account books. In these circumstances, the Commissioner (Appeals) and the Tribunal were justified in holding that the Assessing Officer could not have increased the gross profit ratio merely because it was low as compared to the gross profit ratio of the preceding year. If the stock register was not maintained by the assessee that may put the Assessing Officer on guard against the falsity of the return made by the assessee and persuade him to carefully scrutinize the account books of the assessee. But the absence of one register alone did not amount to such a material as would lead to the conclusion that the account books were incomplete or inac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure on account of depreciation on vehicles and petrol diesel expenses. 35. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the disallowance by observing as under : 52. I have considered the submission of the appellant with reference to the facts of the case. The disallowance of depreciation on cars and disallowance of expenditure on petrol on expected personal use of directors cannot be taken as a ground for making of such a disallowance in the case of a company for the reason that a limited company cannot have any element of personal usage. If they are used by the directors or any other persons for their personal purposes then, the same has to be included as income of the persons using the vehicle as a perquisite. During the years when FBT was applicable, the personal usage was automatically taken care of by way of a separate taxation in the hands of the company itself. The appellant has relied on the decision given in the case of Sayaji Iron Engg. Co. v. CIT [2002] 121 TAXMAN 43 (GUJ.) = [2002] 253 ITR 749 (Guj.). The relevant portion of the decision is- 9.1 There is one more aspect of the matter which requires to be considered. The assessee whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wance made by the Assessing Officer by following the decision of Hon ble Gujarat High Court in the case of Sayaji Iron and Engineering Company (Supra). Similar view has been taken by the Mumbai Bench of the Tribunal in the case of Urmila Company Ltd., reported in 20 Taxmann.com 324 and Ramkishin Textiles Pvt. Ltd. Vs. ITO reported in 16 Taxmann.com 57 which have been relied on by the CIT(A). The Ld. Departmental Representative could not distinguish any of the above decisions relied on by the CIT(A). Under these circumstances and in absence of any distinguishable features brought on record by the Revenue, we do not find any infirmity in the order of the CIT(A) deleting the adhoc disallowance. Accordingly, we uphold the same. The ground raised by the Revenue is accordingly dismissed. 36.1 Identical ground has been taken by the Revenue in A.Y. 2005-06 (Ground No.2). Following our above reasonings, the ground raised by the Revenue is dismissed. 37. Ground of appeal No.4 by the Revenue reads as under : On the facts and in the circumstances of the case the CIT(A) erred in deleting the addition of ₹ 43,79,015/- for the A.Y. 2004-05 on unexplained investment in cars . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he wants and then transfer the same in his own name at a later date about half the price of the original cost. According to the Assessing Officer these purchases are effected in a short span of time from the time of original purchase. So far as the 4 instances given by the Assessing Officer are concerned, the Ld.CIT(A) noted that the Assessing Officer has not examined any of the sellers and he has simply relied on the conclusion drawn by the Investigation Wing. So far as the statement recorded from Mr. Ponkshe is concerned he noted that the vehicle was purchased in the F.Y. 2007-08 (18-09-2007) and therefore the finding should be relevant for the A.Y. 2008-09. The Assessing Officer has not given any opportunity of cross examination to the assessee. However, he noted that the assessee has also not demanded an opportunity of cross examination in assessment stage. So far as the purchase of S-Class Mercedez Car, Jagaur and Land Cruiser are concerned, he noted that the vehicles were purchased after two years from the original sale. He observed that cost of vehicles undergo substantial erosion within a couple of years of purchase especially in luxury segment. Therefore, it would be unfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition of ₹ 15 lakhs during A.Y. 2005-06). We find in appeal the Ld.CIT(A) deleted the addition made by the AO on account of excess money paid towards purchase of cars on the ground that the AO has not examined any of the sellers and he has only relied upon conclusions drawn by the Investigation Wing. He further noted that the vehicle was purchased from Mr. Ponkshe during F.Y. 2007-08, therefore, the same is relevant for making addition in A.Y. 2008-09 and no addition could have been made during the impugned assessment year. Similarly, he observed that the purchase of S-class Mercedez Benz car, Jagaur, and Lancer Cruiser etc. the vehicles were purchased by the group concerns after 2 years from the original sale. According to him, the vehicles undergo substantial erosion within a couple of years of purchase especially in luxury segment. Therefore, it cannot be said that the seller will sell at the same price at which he has purchased the vehicle. Since nothing has been brought on record by the AO that the assessee has paid any extra money over and above the agreed price, therefore, we find no infirmity in the well reasoned order of the CIT(A) deleting the addition. 40.1 It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... op is taken. After analysing the figures for past years and following his order for A.Y. 2006-07 wherein the issue was decided by taking the expenditure over gross receipts at 45%, which was accepted by the assessee, the AO made addition of ₹ 1,00,45,781/-, the computation of which was as under : Gross Agri Receipt shown ₹ 5,33,69,815/- Expenses @45% ₹ 2,40,16,417/- Net Agricultural Income ₹ 2,93,53,398/- Net Agricultural income shown by Assessee ₹ 3,93,99,179/- He accordingly made addition of ₹ 1,00,45,781/- being the difference as income from other sources . 42. Before the CIT(A) it was submitted that the addition was made by the Assessing Officer without any basis. It was argued that acceptance of expenditure determined in A.Y. 2006-07 cannot be the basis for making a similar addition in the subsequent year. Without prejudice it was argued that the addition made at ₹ 1,00,45,781/- was erroneously taken and the correct figure would be ₹ 69,30,802/- as per the body of the assessment order itself. 43. Based on the arguments advanced by the assessee the Ld.CIT(A) granted relief of ₹ 31,14,979/- and sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advertisement account and that the coins were given to distributors on achieving sales target. The assessee also produced copies of ledger accounts and bills for the same and submitted that the AO had not confronted the assessee with this issue at the assessment stage, otherwise the assessee could have produced the documents. It was further argued that no seizure was made of the silver coins. 47. Based on the arguments advanced by the assessee the Ld.CIT(A) deleted the addition holding that the silver coins stand fully explained in the books of account. He accordingly deleted the addition. 47.1 Aggrieved with such order of the CIT(A) the Revenue is in appeal before us. 48. After hearing both the sides we do not find any infirmity in the order of the CIT(A). The assessee has produced the bill dated 10-12-2008 for purchase of 66 kgs of silver from Hundia Exports amounting to ₹ 11 lakhs. The copies of the ledger account were also produced before the CIT(A). It is the settled proposition of law that the powers of the CIT(A) are co-terminus with that of the power of the Assessing Officer. He can do anything which the Assessing Officer has failed to do. From the copy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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