TMI Blog2020 (10) TMI 1048X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has pointed out to offer persons for purchase of paddy as authorized representative Creditors are mentioned by the assessee in his reports, who have filed undertaking in which they have categorically stated that they are authorized representative but received paddy from the paddy purchase centre and for milling from joint custody and maintenance and to deliver the resultant CMR in the RRC/FCI on behalf of the assessee. On perusal of the ledger copy of the creditors shown by the assessee the narration is with regard to labour charges, loading, unloading, banking and netting expenses and freight inward and outward expenses. Assessee has provided details of the creditors, which should have been examined by both the authorities below but they did not do so for proving the genuineness of the creditors. As per our considered opinion, the assessee discharged his liability as cast upon him and now the duty shifted on the revenue authorities for the verification of the genuineness of the creditors, which are lack in this case. In the second round of proceedings before the Assessing Officer, he could have exercised his powers for presence of the creditors and verification of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted physically to bags as kept lying in the row. The assessee has also alleged that the stock/inventory has been counted by the search team only on the basis of eye estimation but not actual weighment of stock of paddy/rice/bran/husk etc. Therefore, considering the totality of facts and circumstances of the case, we allow 20%(twenty percent) relief to the assessee on the total addition made due to there may be difference between eye-estimation for stock taking and actual weighment of the stocks found and the rates applied by the revenue authorities and uphold 80%(eighty percent) of the addition made by the AO in this regard. Accordingly, we are not in agreement with the observations made by the CIT(A) deleting the additions made by the AO. - Cross Objection No.51/CTK/2018, IT(SS)A No.138/CTK/2018 (Assessment Year :2014-2015) - - - Dated:- 25-9-2020 - SHRI C.M. GARG, JM AND SHRI L.P. SAHU, AM Revenue by: Shri M.K. Gautam, CIT-DR Assessee by: Shri H.K. Padhee, Advocate ORDER Per L.P.Sahu, AM: The Revenue has filed this appeal against the order of CIT(A)-2, Bhubaneswar, dated 29.06.2018 for the A.Y.2014-2015, on the following grounds of appeal :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. CIT (Appeals) erred in law as well as fact in deleting the addition of ₹ 1,28,72,786/- on a/c of shortage of stock of paddy and bran and ₹ 13,47,352/- on a/c of excess of rice and broken rice. (x) That, the Ld. CIT (Appeals) has failed to notice the fact that the inventory of stock was taken by the survey party in presence of the Manager Sri Deepak Sharma with the help of the staff members of the assessee concern and no satisfactory and convincing reply was given by Sri Sharma when he was confronted with the stock difference during the course of survey operation. No reconciliation of stock difference was produced by the assessee later on also. (xi) That, the Ld. CIT (Appeals) has ignored the fact that the assessee was unable to explain the shortage of stock of paddy and bran and the excess of stock of rice and broken rice during the assessment proceeding as well as remand proceeding before A.O. Hence Ld CIT (Appeals) is not justified in deleting the addition on this ground. (xii) That, the Ld. CIT (Appeas) erred in law as well as fact in deleting the addition of ₹ 2,40,000/- which was added by the A.O. on a/c of income of the assessee from b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has no explanation whatsoever, to offer on this point i.e. the shortage of stock of paddy and bran of ₹ 1,28,72,786/- and the excess of stock of rice and broken rice of ₹ 13,47,352/-. Further, the AO noted that it was the primary obligation on the part of the assessee to discharge his onus/responsibility which he totally failed to do so. Therefore, the AO computed the shortage of stock of paddy and bran at ₹ 1,28,72,786/- (₹ 1,28,06,250/- plus ₹ 66,736/-) and the excess of stock of rice and determined broken rice at ₹ 13,47,352/- (₹ 10,90,600/- plus ₹ 2,56,752/-). Accordingly, the AO added the same to the total income of the assessee for the assessment year under consideration after observing as under :- 3. On verification of balance sheet filed it is seen that during the previous year relevant to the assessment year under consideration, the assessee has shown sundry creditors amounting to ₹ 7,72,400/-. In this connection, the assessee was required vide this office letter (questionnaire) No.DCIT(Central)/SBP/2015-16/569, notice u/s.42(l) dated 24.09.2015 to furnish the following information along with other requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to represent his case either personally or through authorized representative. Hence, another letter No. DCIT(Central)/SBP/2015-16/1228 was issued to the assessee on 20.01.2016 for compliance on 28.01.2016 at 10.30 AM. But on this given date also the assessee did not appear to represent his case. Accordingly, a show-cause letter being No. DCIT(Central)/SBP/2015-16/1392 was issued on 10.02.2016 fixing the date of compliance on 19.02.2016 at 2.00 PM. However, on verification of records it is seen that on 19.02.2016 the assessee neither appeared nor have filed time petition. From the above discussion, it can be seen that there was frequent non-compliance on the part of the assessee and the reasons for such non-compliance is best known to the assessee only. Vide SI. No.11 of the said show-cause letter dated 10.02.2016, the assessee was asked to prove the genuineness of the claim of sundry creditors which is reproduced herein below: In the case of the sundry creditors also you were asked to furnish certain information concerning to the assessment years 2008-09, 2009-10, 2010-11, 2011-12, 2012-13, 2013-14 and 2014-15 as per the pro-forma provided in the questionnaire dated 24th Sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the year nor have filed any written submission in this regard. In absence of explanation regarding the source of such fresh capital introduced during the year, I have no alternative but to conclude that the assessee has introduced such fresh capital out of the income earned from undisclosed sources and add the same to his total income for the assessment year 2014-15. Addition: ₹ 5,97,186/-. 5. In the balance sheet, the assessee has shown E.P.F. professional tax payable at ₹ 11,888/- and ₹ 2,500/- respectively, totalling to ₹ 14,388/- as on 31.03.2014 under the head Liabilities for expenses. Since the assessee has not filed any evidence regarding its payment within the due date as provided under the Income tax Act, 1961, the same is disallowed and added to the total income of assessee for the assessment year 2014-15. Further in the personal balance sheet, the assessee has shown outstanding liability on account of TDS payable amounting to ₹ 1,22,613/- for which no evidence has been enclosed along with return of income filed. Since there is no evidence regarding its payment into the account of Central Government, the outstandin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: Q. No.8: Please go through the impounded loose sheet bundle MFP-30 at page No.9, 10 regarding the ledger of Maharaja Food Products in the books of Shree Shyam Products, for period 1.6.2013 27.6.2013 with opening balance of ₹ 7,78,781/-. All the receipts by you are in cash in respect of bran sales. How is Shree Shyam Products associated with you and how do you account for the above transactions in your books of accounts? The total transaction as per this ledger account is ₹ 21,44,182/-including opening balance, photo copies of which has been supplied to you. Ans: The sale of bran as per this account is sold to BRMC. The bran production as per govt, rule should be 4% but the actual production is 5-5.5%. We have purchased bran from the market and sold it in cash to different parties. Q. No.9: As you said that you have purchased bran but during the course of search and survey in your group, no evidence of purchase of bran was found. And you said that the bran production is usually more than 4% and goes up to 5-5.5%. Hence, why it should not be construed from the documents shown to you that these sales are out of the excess bran you have produced? ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts . In view of the above findings, the assessee vide letter in the form of questionnaire No. DCIT(Central)/SBP/2015-16/569, dated 24.09.2015 was required to explain the undisclosed sales of rice bran with documentary evidence on 13.10.2015. On this given date, Sri Sudip Sawdia, advocate and the authorized representative appeared and represented the case on behalf of the assessee. In response to the said questionnaire, he filed acknowledgment copy of ITR-V submitted for AY. 2013-14, computation statement of total income, Form No. 26AS, copy of audit report along with audited profit loss account and balance sheet with relevant schedules and premium paid certificate issued by the LIC of India etc. Apart from the above, the authorized representative of the assessee did not file any details/documents including the explanation called for on the undisclosed sales of rice bran as discussed above. Hence, the case was subsequently fixed for hearing on 23.10.2015, 13.11.2015, 27.11.2015, 11.01.2016, 28.01.2016 and lastly on 19.02.2016. But all the time there was no compliance on the part of the assessee. The assessee has also not thought it proper and appropriate to file time pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,808.70 4,354 ( + ) 545.30 Broken rice 123.72 409 ( + ) 285.28 Bran 139.67 56.25 R83.42 In this connection, a statement of Sri Deepak Sharma, Manager brother of Sri Sanjay Sharma, Proprietor of M/s. Maharaja Food Products, who looks after business activities was recorded during the course of survey operation. During such proceeding, he was asked to explain the reasons for shortage/excess of stock found. In his reply Sri Sharma stated that there should not be such difference of stock. He also stated that the stock inventory was taken on eye estimate but at the same time he also assured to explain the stock difference later on after verifying the records. However, he failed to furnish reconciliation statement of stock till the date of preparation of Appraisal Report. During the course of post-search investigation, a statement of Sri Deepak Sharma was recorded on 27.11.2013. While recording his statement, he was categorically asked to explain the stock difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10,90,600/- plus ₹ 2,56,752/-) with supporting documentary evidence on 13.10.2015. In this connection, it may be stated here that on this given date, Sri Sudip Sawdia, advocate and the authorized representative appeared and represented the case on behalf of the assessee. In response to the said questionnaire, he filed acknowledgment copy of ITR-V submitted for AY. 2013-14, computation statement of total income, Form No. 26AS, copy of audit report along with audited profit loss account and balance sheet with relevant schedules and-premium paid certificate issued by the LIC of India etc. Apart from the above, the authorized representative of the assessee did not file any details/documents including the explanation called for on the issue as discussed above. Hence, the case was subsequently fixed for hearing on 23.10.2015, 13.11.2015, 27.11.2015, 11.01.2016, 28.01.2016 and lastly, on 19.02.2016. But all the time there was no compliance on the part of the assessee. The assessee has also not thought it proper and appropriate to file time petition except for the date of hearing fixed on 13.11.2015. Even though the assessee filed time petition for the proceeding dated 13.11. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the income of the assessee from bus plying for the assessment year 2014-15 at ₹ 2,40,000/- per annum i.e. ₹ 20,000/- per month, after all expenses which works out to ₹ 2,40,000/- and add the same in his total income. Addition: ₹ 2,40,000/-. For the reasons stated above, initiated penalty proceedings u/s. 271(l)(b) u/s. 271(l)(c) of the Income tax Act, 1961. In view of the above discussion, the total income of the assessee is computed as under: Net profit as per profit loss account ₹ 14,02,890/- Less: Income to be considered separately ₹ 1,896/- ₹ 14,00,994/- Add: Sundry creditors treated as bogus as discussed in the body of the assessment order vide Para No.3 ₹ 7,72,400/- Add: Income earned from undisclosed source and introduced as fresh capital as discussed in the order vide Para No.4 ₹ 5,97,186/- Add: Unpaid outstanding liabilities disallowed as discussed in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er copies, but, supporting bills and vouchers were not filed either of assessment stage or appeal stage. As it can be seen from the letter of this office dated 19.01.2018, calling for remand report, the assessing officer was asked to obtain any further details required by her during the remand proceedings. The assessing officer has not called for any details and has submitted remand report. The appellant has filed name address, Aadhaar card details and ledger copies, it is seen that these creditors are regular suppliers of paddy and authorized representative for paddy collection, in the previous year as well as subsequent years. This is a search and seizure case and no evidence of bogus purchases was found during the search. Considering these aspects, the creditors are held as genuine and the addition of ₹ 7,72,400/- is ordered to be deleted. The ground of appeal is allowed. 6. Ground No 2(h):- 6.1 In this ground the appellant has contested the addition made by the assessing officer of ₹ 5,97,186/- on account of unexplained capital. The appellant has explained that Maharaja Food Products is a proprietary concern of the appellant and the cash introduced in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A. Details of books of account produce for verification. Cash book, Journal, Ledger, Paddy stock register, bran broken sale register, vouchers, bank statements, tax invoices, purchase bill and other relevant papers/documents from the Asst. Year 2008-09 to 2014-15. B. Other documents relevant papers filed herewith. (i) Reply to questionnaire dtd.24.09.2015 issued U/s.l53C of the Act from the Asst. Year 2008-09 to 2014-15. (ii) Reply to questionnaire did. 10.02.2016 issued U/s.l53C of the IT Act from the Asst. Year 2008-09 to 2014-15. (iii) Ledger copy of the day to day expenses with vouchers towards carriage inwards and labour charges for the Asst. Year 2010-11. (iv) Ledger copy of the day to day expenses incurred towards custom milling expenses for the Asst. Year 2012-13. (v) Details of Unsecured loan confirmation account from the Asst. Year 2008-09 to 2014-15. (vi) Copy of the loan confirmation account of M/s. Bargarh Rice Miller Consortium Pvt. Ltd. (vii) Ledger copy of the sale of bran account confirming the bran sale by M/s. Bargarh Rice Miller Consortium Pvt. Ltd. M/s. Balgopal Food Products during the Asst. Year 2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that he has never sold any bran to Shri Shyam Products and further that the actual amount as per the impounded material is ₹ 86,69,929/-, which includes turnover of Shri Shyam Products and Radhe Krishna of ₹ 46,75,479/-, double addition of ₹ 28,88,765/- and amounts pertaining to earlier period of ₹ 11,05,685/-. According to the appellant, entire addition amount to ₹ 86,69,929/- which is alleged by the assessing officer as received from Shri Shyam Products which is totally incorrect. The relevant portion of the submission of the appellant is as below 23. As regards GROUND No.2(iv) - Addition of ₹ 83,62,872 made on account of undisclosed sale of rice bran, it is humbly submitted that the Assessing Officer has made this addition on the basis of seized loose paper marked MFP 30, where the assessee has been indicated to have sold rice bran to Shri Shyam Products and Radhe Krishna totalling ₹ 83,62,872, which in fact according to correct calculation is ₹ 46,75,479 thus - the total bran transaction as per show cause notice is ₹ 83,62,8727-, whereas total transaction as per table-I II shown in the show cause notice comes at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act to the said third party. It is, therefore, right from the beginning the assessee is requesting to issue summons to those parties and allow opportunity of confrontation to the assessee, but unfortunately the AO has neither conducted any enquiry from those parties nor issued summons to them in order to ascertain the truth. All these facts have clearly given in the reply to SI. 8 to the notice No. DCIT(Central)/SBP/2015-16/139 dt.10.02.2016 (PB Page No. 13 - 14) it was specifically requested to the Assessing Officer to summon Shree Shyam Product as well as Radhe Krishna to confirm the facts that they have purchased either rice bran or husk, as alleged, from M/s. Maharaja Food Products, Chakarkend, the assessee. But the request to the Assessing Officer was in vain. No summon was issued and no cross examination was allowed to the assessee though prayed for before the learned Assessing Officer, which is against the principles of natural justice. Instead of so doing, the AO insisted upon the assessee to explain the noting in the seized papers'of third parties, which is in gross violation of principles of natural justice. It is therefore prayed before Your Honour to please ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appears in ledger account of the appellant in books of accounts of Shri Shyam products and has stated that this cheque has been issued by BRMC. The appellant has also submitted a certificate from United Bank of India, Bargarh that they do not have any account in the name of Shri Shyam Products. The submission of the appellant along with evidence was forwarded vide the office letter dated 21.06.2018 to the assessing officer for submission of remand report. The relevant portion of this office letter is as below:- 2. In the case of the appellant, for Asst. Year 2014-15, one of the additions made is of ₹ 83,62,872/- on account of sale suppression of rice bran. As per your remand report, vide letter under the reference above, you have stated that document MFP-30 was impounded from the business premises of the appellant and therefore the appellant can not deny the transactions with Sri Shyam Products and Radhey Krishna. Similarly, you have also stated that the seized document HMB-25 seized from the business premises of M/s. Maharaja Hotels also indicates the unaccounted sale of rice bran to Sri Shyam Products. 3. The documents HMB-25/MFP-30 mention cheque payments as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that all cash sales of bran was not shown in the books of accounts. Assessee in the submission before the appellate authority furnished the submission that there were no sales made to M/s, Shyam Products and Radhe Krishna. As per seized documents MFP-30, sale was made with M/s. Shyam Products and Radhe Krishna. As per ledger copy of seized documents MFP-30, cash sale with M/s. Shyam Products and Radhe Krishna with the assessee was made. Assessee made the submission that there were no sales made to M/s. Shyam Products and Radhe Krishna, which cannot be accepted. In the assessment year 2014-15, there are no issues of cheque received from M/s. Shyam Products and M/s. Bargarh Rice Millers Consortium Pvt Ltd. Addition was made on account of ledger copy of transaction in seized documents MFP-30. Therefore the transaction cannot be denied. 8.6 I have carefully examined the assessment order, submissions of the appellant, remand report of the assessing officer and rejoinder of the appellant. As stated earlier, the pages in the impounded document MFP-30, is nothing but alleged ledger account of Maharaja Food Products in books of Shri Shyam Products. This ledger copy contains ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y department of Government of Orissa and they regularly checked the registrar and put their signatures on register kept for the purpose and that last check was on 16.08.2013, just five days before the date of survey conducted on 21.08.2013 and further that no discrepancy were found by the officers of Government of Orissa. The relevant portion of the submission of the appellant is reproduced below:- 26. In these two grounds following two additions are disputed- (v) Addition of ₹ 1,28,72,786 on the alleged shortage of stock of paddy and bran, and (vi) Addition of ₹ 13,47,352 on the alleged excess of rice broken rice 27. That the survey party reported excess/shortage of paddy, rice, broken rice and bran as under: Items Stock as per books (Qtls) Stock found on physical verification (Qtls) Excess/shortage (Qtls) Paddy 36,077* 25,935 (-) 10,245 Rice 3,808.70 4,354 (+) 545.30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises on 21.08.2013 to 22.08.2013 an estimated the value of excess/shortage found at ₹ 1,28,72,786/- and ₹ 13,47,352/- shall not be added to your total income. In thjs regard the assessee may kindly be allowed to forth the facts figure for kind appreciation of the case. At the outstate the assessee again prays that copy of the calculation sheet prepared for taking/determine the stock of goods such as paddy, rice, broken rice bran kept in different four big godowns, veranda, paddy chalana, raw paddy silo, above handi storage, in handi, in drier, parboiled silo in mill premises, scattered paddy in milling side. That the assessee M/s. Maharaja Food Products (MFP in short) is engaged in the business of milling of paddy sale of rice produce and by products broken rice, bran. In order to effectuate the business activities the assessee has installed a rice mill unit in the name style of M/s. Maharaja Food Products, Po: Chakarkend, Dist .Bargarh. The first commercial production was commenced on 03.11.2004 i.e. during the asst. year 2005-06. That for the aforesaid activities the assessee is registered under the Odisha Value Added Tax Act' 2004/ Centr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Marketing Federation Ltd. (MARKFED) Orissa; In terms of such agreement the principal such as MARKFED, Orissa shall purchase paddy directly from the farmers and the assessee custom miller will transport the same from the market yard on payment of charge within the limit prescribed; that after milling, rice of specified quality as per the out turn ratio fixed is delivered. Thus it is clearly evident that whatever the stocks of paddy and rice are found at mill premises belong to the principal OSCSC/MARKFED. And that the ownership of such stocks are of the principal. The assessee is only a Custom Milling Agent. A statement has been recorded U/s. 133 A of the Income Tax Act from Shri Deepak Sharma in course of survey proceedings in the mill premises on 21.08.2013 22.08.2013. The survey party puts the question. Relevant question for present purposes are quoted as follows 6Q. What are the books of account maintained by M/s. Maharaja Food Products ? A. We maintain stock register for paddy, rice, bran and broken rice. 7Q. Do you maintain Purchase and Sale registers ? A. We do not maintained Purchase and Sale register for paddy and rice, because we do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Varandaha Godown No. 3 5900 bag ₹ 30,97,500/- 04. Godown No-4 17600 bag ₹ 92,40,000/- Total 61505 bag ₹ 3,22,90,125/- 61,505.00 x 42Kg.x 1250 = ₹ 3,22,90,125/- 100 61505 x 42 = 25832 Qtl. 100 Stock of paddy kept at different godown has been estimated taking each bag @ 42 which is not a fact at all in reality. The stock of paddy in bag are not stored at a uniform quantity, generally it is also a fact that bag/packets contents paddy either 40 Kg. to 50 Kg. and at times the bags contents 74 or 75 Kg. There is no actual weighment though all the facilities required for the purpose of weighment were available. Likewise the stock of broken rice bran scarred at different palaces in milling premises are estimated containing the rice @ 50 Kg. per bag, broken rice @ 50 Kg. per bag and bran @ 45 Kg. per bag and calculated as follows- Date of Search Inventory of Stocks Found/Seized Restrained at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facilities like automatic kanta (weighing machine) are available in the mill premises itself. Even the labours for it are also available. The assessee feels sorry to say that he had made a prayer earlier to supply the calculation sheet how the quantity of paddy kept in each big godown are determined. There may be certain mistake in calculation, addition and subtraction or otherwise while taking the inventory of the stock of goods and in counting and in preparation while taking the physical stock of goods. The assessee also states when Deepak Sharma while recording the statement U/s.l33A on 22.08.2013 was asked to explain the excess/shortage of different items (Q.21 of the statement dt. 22.08.2013) In my opinion there should not be such difference of stock. Further, the stock inventory has been taken an eye estimate. However, I will explain this difference later on after going through our records. With regard to excess ofrice~as calculated is due to on eye estimation, further the yield of rice out of milling of paddy from 16.08.2013 to 20.08.2013 were scarred in the milling house. That stock as estimated as per the prescribed formula, actually there is no physical ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bags without physical counting of bags, rather on eye estimation, but subsequently converted the same into quintals by taking unique quantity per bag. The stock of paddy in bag are not stored at a uniform quantity, generally it is also a fact that bag/packets contains paddy either 40 Kg. or 50 Kg. And at times the bags contains 74Kgs or 75 Kgs. The actual quantity of paddy cannot be ascertained without actual weighment of the same. Thus, the working out of the stock inventory is erroneous, because it was on the basis of eye estimation and not actually on weighment. Therefore, the additions made on the basis of such erroneous stock inventory and deducing excess/shortage, is not at all justified and not sustainable in the eye of law. 30. That it is further submitted that the milling of paddy and sale of rice are under the control and regulated by the Essential Supplies Act and the stock of paddy rice in possession of the assessee on behalf of the OSCSC Ltd., are from time to time checked and verified by the Food Supply Department, Govt, of Orissa. They periodically and regularly check the registers and put their initials in support of having inspected the istock o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hin the limit prescribed and after milling, rice of specified quality as per the out-turn ratio fixed by them is delivered. It is necessary to slate here that the stock of paddy kept in the mill premises was under lock and key of the officials of the Principals as well as the assessee and milling of paddy takes place only after releasing of stock of paddy by the said officials for the purpose of milling. The officers of the Principlals give periodical certificate on the verification report - It is certified that there is no mis-appropriation/diversion by the miller and paddy/rice available has been stored safely . For ready reference a sample copy of such certificate is enclosed herewith at PB Page No. 109 and 110. As already stated, the assessee is required to deliver the rice to them and the assessee is debarred/prohibited from selling rice to others. The assessee is entitled to only milling charges. In this process, whatever stocks of paddy and rice are found at mill premises belong to the principal OSCSC/MARKFED and that the ownership of such stocks are of the principals. The assessee is only a Custom Milling Agent. Because the paddy as well as rice solely belongs to the Princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... report, the assessing officer has stated that stock was taken correctly the valuation was done correctly. 9.4 I have carefully examined the assessment order, written submissions of the appellant and remand report of the assessing officer. I find that the appellant is only a custom milling agent of agencies of Government of Orissa. The principals have right, interest and title to the stock. The godowns in which paddy and rice is kept are under lock and key of the principals. The appellant has filed copies of register of stock which are inspected by government officials. The last such inspection is on 16.08.2013, just five days before the survey. No discrepancies were found by officials of the Government of Orissa. Since, they are the owner's of rice and paddy; they have far higher stakes in the stock of rice and paddy. Considering these aspects, the addition of ₹ 1,28,72,786/- on account of alleged shortage of stock of paddy and bran and of ₹ 13,47,352/- on account of alleged excess of rice and broken rice are ordered to be deleted. The grounds of appeal are allowed. 10. Ground No 3 (vi):- 10.1 In this ground, the appellant has contested the additi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11 on page 110 (internal marking). The final conclusion of the AO can be seen in the last paragraph on page 108 (internal marking). The CIT(A) has allowed the relief to the assessee and his findings are contained in para-5.2 on page-7 of the appellate order. The decision of the CIT(A) is totally erroneous and contradictory to the submissions made by the assessee during appellate proceedings for the following reasons: a) The CIT(A) has allowed relief to the assessee on the ground that the creditors in question were trade creditors and paddy was purchased from them in the current year as well as subsequent years. In this connection, kindly refer to para-20 on page-10 of Annexure-I (affidavit of the assessee) wherein he has clearly stated that he was merely a custom milling agent for Orissa State Civil Supplies Corporation Ltd. (OSCSC Ltd.) besides being an agent of MARKFED, NAFED, NCMSL, PACS and FCI. In fact, paddy was purchased by his principals directly from farmers and it was sent to him for milling. These facts are again reiterated in para-23 on page-12 of Annexure-I (affidavit of the assessee) and in addition to that, it was alleged that he had appointed certain representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) has held that the CIT(A) is required to apply his mind to all issues which arise from impugned order before him whether or not same had been raised by appellant before him and that he is obliged to dispose of the appeal on merits. In view of above facts, it is requested that the addition made by the A.O. may kindly be restored and finding of CIT(A) be reversed. iii.) The third and fourth grounds of appeal relate to the addition of ₹ 5,97,186/- made by the A.O. on account of unexplained capital. This issue has been discussed by the AO in para-4 on page 107 (internal marking- inadvertently two pages have been marked as 107). The CIT(A) has discussed the remand report of the A.O.in para-6.2 on page-9 of the appellate order. In the remand report, the AO has stated that sources of capital have remained unexplained. The CIT(A) has allowed the relief to the assessee and his findings are contained in para-6.4 on page-10 of the appellate order. The decision of the CIT(A) is totally erroneous for the following reasons: a) The CIT(A) has held that an amount of ₹ 5,97,186/- was transferred from individual account to the proprietary concern. However there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f buyers, dates of unaccounted sale, dates of cash receipts etc. Hence by no stretch of imagination, these can be called dumb documents or irrelevant. c) The suppressed sale of rice bran stands proved by the contents of impounded documents when it is read in conjunction with the statement of Shri Deepak Sharma, Manager of M/s. Maharaja Food Products and elder brother of the assessee, which was recorded on oath u/s. 131 of the Income Tax Act. He has clearly admitted that such sale of rice bran was not recorded in the regular books of account. His version that rice bran was purchased out of books of account remained unsubstantiated as no such purchase bills were found during the course of survey operation. On the contrary, he had stated on oath that rice bran was produced in the vicinity of 5% to 5.5% during rice milling (as against norm of 4% fixed by the Govt.) and such unaccounted production was sold out of books of account. Reliance is placed on the decision of Hon ble Punjab and Haryana High Court in the case of Rakesh Mahajan Vs. CIT (214 CTR 218) wherein it was held that it is well settled that admissions constitute best piece of evidence because admission are self-harm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he unaccounted sale of rice bran to Shree Shyam Products stands proved. f) It is pertinent here that the assessee was a director in Bargarh Rice Mills Consortium (BRMC) till 2012 (kindly refer to question no.25 on page-55 of Annexure-II of paper-book). Therefore the collusive nature of such unaccounted transactions can't be denied by the assessee. In fact, if replies of the assessee on page 54 of Annexure-II of paper book (questions 22 23) are examined, then it would be clear there were large number of transactions between the assessee and BRMC which were not found recorded in the books of account. g) As regard presumption available to the Assessing Officer u/s. 292C of the Act, reliance is placed on the decision of Hon'ble Delhi High court in the case of CIT Vs. Naresh Kumar Aggarwala (9 taxmann.com 249 /331 ITR 510) where it was held that there was a presumption raised under section 132(4A) on seizure of fax message and it was upon assessee to rebut that presumption by offering a plausible explanation. In view of above facts, it is requested that the addition made by the A.O. may kindly be restored and finding of CIT(A) be reversed. v.) The ninth, tenth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Revenue officials are not Police officers and the confession, though retracted, is an admission and would bind the petitioner. In view of above facts, it is requested that the addition made by the A.O. may kindly be restored and finding of CIT(A) be reversed. vi.) The twelfth ground of appeal relates to the addition of ₹ 2,40,000/- made by the A.O. This issue has been discussed by the AO in para-8 on page 103 (internal marking). The CIT(A) has allowed the relief to the assessee and his findings are assailed in para-10.2 on page-30 of the appellate order. This issue may please be adjudicated on merit. 7. In addition to the above written submissions, the ld. CIT DR submitted that the ld. CIT(A) has not dealt the issue properly in respect of every grounds allowed by him. He should have been discussed in details before allowing the appeal of the assessee and he has not properly considered the remand report submitted by the AO and documents found during the course of search and seizure/post enquiry/survey proceedings. The Assessing Officer gave many opportunities to the assessee at the time of scrutiny assessment proceedings for rebutting the show cause no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order exparte which was vehemently challenged before the learned CIT(A) to be arbitrary, illegal and unjustified. An Affidavit in this regard containing 15 pages was filed before the learned CIT(A) (Copy attached as ANNEXURE-I) and it was contended before the learned CIT(A) that the Assessing Officer has framed the assessment order in haste and without giving proper opportunity of being heard to the assessee. Further disputing the various additions (made by the Assessing Officer) before the learned CIT(A), the assessee also filed Written Submissions containing 53 pages alongwith its enclosures in shape of paper book of 114 pages (Copy attached as ANNEXURE-II) on various issues enclosing therewith relevant documents. Learned CIT(A) called for remand report from the Assessing Officer vide letter dt.19.01.2018. The Assessing Officer furnished the remand report vide letter dt.22.03.2018. Thereafter the assessee filed Counter to remand report enclosing therewith further various evidences/documents containing 19 pages (Copy attached as ANNEXURE-III). Thereafter, on the date of hearing before the learned CIT(A), the assessee along with his Advocates entered appearance alongwith t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ease furnish Relationship with the entity (Party/ concern) Complete present address of such entity with PIN code. Maximum amount outstanding for three years and as on date. At the beginning and at the end of the F.Y. under consideration Balance as on date. Amount of interest paid/ amount of interest received and the amount involved. 1 2 3 4 5 6 7 8 9 1 Banbas Sahu Nil 96000 Creditor Nil Creditor Bargarh No 2 Bhubaneswar Sahu Nil 92000 Creditor Nil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ives of the assessee to receive paddy from the paddy purchase centre and for milling from joint custody and maintenance and for delivery the resultant CMR in the RRC/FCI on behalf of the assessee. A sample copy of such letter of authorisation is placed at PB Page No. 57 - 58. In the said authorisation letter, it is further stated as under : All the acts, deeds, things done by the above representatives shall be construed as the acts, deeds, things and matters done by me as if I am personally present to do the same. For any acts, commissions or omission of my above authorised representatives that may cause any pecuniary loss to the Corporation I shall be responsible to make good loss of the same. For this work, the assessee sometimes makes advances to them and sometimes the representatives spent money of their own and subsequently reimbursed the same from the assessee. In this process of involvement of the Representatives in assessee s business, monetary transactions with them are inevitable. Therefore, it is humbly submitted that they are actually not creditors though the amount shown as sundry credit against them is actually the amount they had spent in the above proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, in the previous year as well as subsequent years. This is a search and seizure case and no evidence of bogus purchases was found during the search. Considering these aspects, the creditors are held as genuine and the addition of ₹ 7,72,400 is ordered to be deleted. The ground of appeal is allowed. 3.2. That in the Balance Sheet, the assessee has shown Sundry Creditors at ₹ 7,72,400, the details of which have been clearly given in the submissions filed before the Assessing Officer on Dt.21.03.2016 giving all details such as name of the creditors, amount credited etc. The assessee is having all the details of sundry creditors with ledger accounts, their name, address, aadhar number etc. The during the assessment proceedings learned Assessing Officer neither examined the same nor made any query about it and whimsically disallowed the claim of the assessee simply alleging that the assessee has no explanation. Therefore, the assessee furnished before the learned CIT(A) the details of sundry creditors, respective ledger copies which were not examined by the Assessing Officer during the course of assessment though produced before him. In the remand proceeding, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roprietorship concerns (1) M/s.Maharaja Food Products, Chkarkend having rice mill business and (2) Sanjay Sharma carrying on business of bus plying and trading besides earning income from other sources. The amount of ₹ 5,97,186, which is now under dispute, is the cash transfer from the account of Sanjay Sharma to M/s.Maharaja Food Products, on different dates, which is well verifiable from the cash book maintained. The assessee has produced the cash book. The learned Assessing Officer without proper verification of the same has added this amount holding as income from undisclosed sources and introduced as fresh capital. Copy of respective ledger accounts are placed at PB page Nos. 76 and 77. On the face of record/accounts, the action of the Assessing Officer is not all justified and therefore, the addition made on this count is liable to be deleted. The amount of ₹ 5,97,186, which is now under dispute, is the cash transfer from the account of Sanjay Sharma (individual) to M/s.Maharaja Food Products, on different dates, which is well verifiable from the cash book maintained. Before the learned CIT(A) the assessee produced the cash book and copy of respective ledge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable nor valid when the said documents was impounded from the business premises of the assessee. 5.1. That during the course of search survey operation, some loose papers seized and marked as MFP-30 where the assessee has been indicated to have sold rice bran to Shri Shyam Products and Radhe Krishna and the statement recorded from one Deepak Sharma, on the basis of which the Assessing Officer made the impugned addition without considering the reply to questionnaire filed by the assessee in this regard during the course of assessment. 5.2. In appeal the learned CIT(A) deleted the said addition of ₹ 83,62,872. The relevant paragraph 8.6 of the order of the learned CIT(A) reads as under: 8.6. I have carefully examined the assessment order, submissions of the appellant, remand report of the assessing officer and rejoinder of the appellant. As stated earlier, the pages in the impounded document MFP 30 is nothing but alleged ledger account of Maharaja Food Products in books of Shri Shyam Products. This ledger copy contains cheque payment as well as cash payments. According to the assessing officer, these are undisclosed receipts of the appellant from Shri Shya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (i) Transaction of Radhe Krishan- ₹ 2,80,213.00 (ii) Transaction of Shyam Product- ₹ 11,05,685.00 (iii) Transaction of Shyam Product- ₹ 10,45,630.00 (iv) Transaction of Shyam Product- ₹ 15,62,922.00 ₹ 39,94,450.00 ₹ 46,75,479.00 Thus the total transaction as per show cause notice comes to ₹ 46,75,479, which the assessee claims to be not relating to the assessee. 24. That the assessee right from beginning is denying to have sold bran/husk to Shri Shyam Products/Radhe Krishna. It is humbly submitted that during the asst. year 2014-15 the assessee has never sold rice bran/husk to Shree Shyam Product and Radhe Krishna as alleged. The Page No.9-10, Page 11, Page-22 23, Page-24 25, Page-15, Page-20 21 page- 40,41 42 of MFP-30 impounded during the year are unsigned loose sheets of third parties and therefore, the contents therein cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the above, without correlating the same by examining the third party and/or obtaining statements from them, the entries found in the accounts of third party have been utilised against the assessee and therefore the addition as made by the learned Assessing Officer on this count is unjustified and is liable to be deleted and it is prayed accordingly. 5.4. That the learned CIT(A) called for remand report from the Assessing Officer, who in her turn submitted the remand report stating therein that the document MFP 30 was impounded from the business premises of the assessee, which contains ledger copy of transaction of sale of rice bran to Shri Shyam Products and Radhe Krishna. Therefore, the assessee cannot deny that transaction does not belong to him. The sale of rice bran was not accounted in the books of account, accordingly assessing officer made the addition. On receipt of remand report, the assessee filed a counter to remand report in which the assessee further explained the issue in paragraphs 12 to 20 of the Counter filed by the assessee (ANNEXURE-III) which is quoted hereunder: 12. That the allegation made against the assessee that he has sold bran/husk to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... parties and thereafter making addition is in violation of principles of natural justice. 14. In this regard it is once again reiterated that the assessee right from beginning is denying to have sold bran/husk to Shri Shyam Products/Radhe Krishna. It is humbly submitted that during the asst. year 2014-15 the assessee has never sold rice bran/husk to Shree Shyam Product and Radhe Krishna as alleged. The copy of Page No.9-10, Page 11, Page-22 23, Page-24 25, Page-15, Page-20 21 page- 40,41 42 of MFP-30 (placed at Pages 1 to 13) impounded during the year are unsigned loose sheets of third parties and therefore, the contents therein cannot be implicated against the assessee without examining those parties. 15. That as regards allegation of sales of HUSK, it is humbly submitted that the assessee had used the husk obtained from milling of paddy as fuel for steam generation which is essential for running the broiler for the purpose of milling of rice out of paddy. The assessee has never sold husk to anybody. 16. That as regards BRAN, It is further submitted that during the AY under consideration the assessee had the stock of bran as under : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es (copy enclosed as ANNEXURE-IV) wherein vide paragraph 12 it was specifically stated that the cheque No.386848 of United state Bank of India was received from Bargarh Rice Miller Consortium Pvt. Ltd and not from M/s.Shree Shyam Products as appeared in the seized ledger account MFP-30. The assessee produced copy of the said cheque, Bank statement, certificate from united Bank of India. The relevant portion of Paragraph 12 is as under: 12. That it may kindly be noticed that from MFP-30 the ledger account of the assessee in the books of Shree Shyam Products (Page 4 hereof) the said party has shown to have paid ₹ 4,11,824 by Cheque No.386848 of United Bank of India. This is completely false. Actually Cheque No.386848 was issued by Bargarh Rice Millers Consortium Pvt.Ltd., and it was duly deposited by the assessee in the United Bank of India. In support, copy of the said cheque and Bank statement, Certificate from United Bank of India (Pages 18,19,20 respectively). That on enquiry from the Bank it is ascertained that there is no account opened in the name of Shree Shyam Products. The certificate issued by the Bank is placed on Page 21, which reads as under: This is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e later on also. (xi) That the Ld. CIT(Appeals) has ignored the fact that the assessee was unable to explain the shortage of stock of paddy and bran and the excess of stock of rice and broken rice during the assessment proceeding as well as remand proceeding before A.O. Hence Ld. CIT(Appeals) is not justified in deleting the addition on this ground. 6.1. That during the course of survey operation the surveying party reported stock discrepancy on comparison of the stock as per books and stock found on physical verification as under: Items Stock as per books (Qtls) Stock found on physical verification (Qtls) Excess/shortage (Qtls) Paddy 36,077* 25,935 (-) 10,245 Rice 3,808.70 4,354 (+) 545.30 Broken rice 123.72 409 (+) 285.28 Bran 139.67 56.25 (-) 83.42 Dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts in each bag and then compared with the stocks mentioned in the stock register (impounded). The assessee humbly submits that the entire process of stock inventory and working out the excess/shortage of stock arrived at by the search party is completely erroneous and also completely based on eye estimation and not by actual weighment of the stocks of paddy/rice/bran etc., when men power and weighing machines are available in the mill premises. It is further submitted that at the time of survey, when asked, it was explained that there should not be such difference of stock. It is because the stock inventory was taken on eye estimate. The same stand was also taken before the learned Assessing Officer. However, the learned Assessing Officer did not believe the same and proceeded to estimate the price of the above stocks at ₹ 1,28,72,786 (₹ 1,28,06,250 for pady + ₹ 66,376 for bran) and ₹ 13,47,352 (₹ 10,90,600 for rice + ₹ 2,56,752 for broken rice) and made the addition on this count to the disclosed income. 28. That the assessee runs a Rice Mill named M/s. Maharaja Food Products and is engaged in the custom milling business for milling of p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical stock with accounts. During the asst. year 2014-15 the Civil Supply Authority Officials inspected the assessee mill premises and verified physicals stock of paddy and rice on different occasion and times i.e. on 01.04.2013, 21.04.2013, 12.05.2013, 24.05.2013, 18.06.2013, 10.07.2013, 05.08.2013 16.08.2013 just five days before the date of survey conducted on 21.08.2013. No discrepancies either in paddy account or rice account they found and accepted. The physical stock of paddy and rice are tallied with the stock register. They put their signature in the stock register in support of having inspected the stock of paddy rice and verified the physical stock with accounts on different date of inspection as stated herein before. That Civil Supply Official has not detected any omission or commission as there is no comments by those authorities in this register. They have no comments anything adversely regarding maintenance of stock register. Registers are impounded U/s.133A of the Act and laying with the department since then. That the said registered i.e. paddy rice stock register has been impounded under identification No. MFP-40 Pages-1 to 20. The said register is st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was advise to stop the milling process, hence there is no milling from 21.08.2013 22.08.2013. Hence the rice, broken rice, bran received out of milling i.e. (from 16.08.2013 to 20.08.2013) were scatred in milling house, veranda and at different places. They could not be weight, packet properly in the bags and also the kunda mixed with the out turn of rice could not be segregated through chalana. Again raw paddy in loose scatred before chalana, clean paddy storage, paddy stored in eight numbers handi loaded for boiling, storage situated above handi, drier, parboiled paddy storage in mill premises. The stock of paddy as kept different storing places as mentioned above has not taken into consideration while taking the physical verification of the stock of paddy. The facts as stated above is evident itself by looking the manner the searching official parties has taken the physical stock of paddy on estimation as they have taken the stock of paddy only kept in different four large big godowns having capacity of more than forty thousand bags at a time each. Date of Search Inventory of Stocks Found/Seized (Paddy) Restrained at the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Items Stock as per books (Qtls) Stock found on physical verification (Qtls) Excess/ shortage (Qtls) Paddy 36077 25832 (-) 10245 Rice 3808.70 4354 (+) 545.30 Broken rice 123.72 409 (+) 285.28 Bran 139.67 56.25 (-) 83.42 PADDY RICE AS PER BOOKS OF ACCOUNT ON 21.08.2013. AGENCY PADDY (in Qtls) RICE (in Qtls) MARKFED Nil Nil O.C.S.C.S. 36077 3808.70 TOTAL 36077 3808.70 As per Survey Report 25832 4354.00 Shortage/Excess (-) 10245 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to arrive at closing balance. The said sale of bran has been effected to a VAT registered dealer M/s. Bargarh Rice Miller Consotorium Ltd. vide Tax Invoice No. 1121, dt.21.08.2013, bran 90 qtls. for ₹ 94,500/- which is inclusive of VAT charged at ₹ 4,500/- Vehicle No. OR17C-7574 which has been duly reflected in VAT return. There will be negligence/tolerance shortage if it is considered. (Copy of the bill Enclosed and marked as Annexure H The searching party during the survey did not find any valuable assets or any incriminating material or papers against the assessee. Basing on a discrepancy found in the stock of paddy and rice during the survey valued it. 29. That the stock inventory prepared by the survey party was actually based on eye estimation and not by way of actual weighment, when the weighment facility is available with the assessee. No working sheet for stock inventory was prepared by the survey team. They have prepared the stock inventory on sampling method. Further they have not taken into account the stock of goods such as, paddy, rice, broken rice bran kept in different four big godowns, veranda, paddy chalana, raw paddy silo, above ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture in the stock register in support of having inspected the stock of paddy rice and verified the physical stock with accounts on different date of inspection as stated herein before. In view of this, the excess/shortage claimed to have been found by the survey party is far from truth and it was so reported by them only on eye estimation and by non- taking the stocks available in the milling process and further on wrong method of converting bags into quintals. Further, the Civil Supply Officials have not noticed any omission or commission as there are no comments by those authorities in the registers maintained by the assessee. They have not commented anything adversely regarding maintenance of stock register. Registers are impounded U/s.133A of the Act and laying with the department since then. That the said register i.e. paddy rice stock register has been impounded under identification No. MFP-40 Pages-1 to 20 and 21 to 29. 31. That it is further submitted that the assessee undertakes only custom-milling for M/s. Orissa State Civil Supplies Corporation Ltd.(OSCSC Ltd.) besides he was also the agent of MARKFED, NAFED, NCMSL, PACS and FCI. For the purpose of custom millin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d receive milling charges and incidental charges such as handling (labour) charges and transportation charges etc. we receive milling charges @ ₹ 25/- per quintal. Thus, since we do not purchase paddy and sale rice, we are not maintaining purchase and sale registers. However, we maintain sale register for bran and broken rice and purchase register for materials purchase. The learned AO did not consider the above submissions and basing on erroneous stock inventory has worked out the excess/shortage in stock and made the impugned addition, which is not proper. 32. In case of broken rice day to day yield of broken rice from 16.08.2013 to 20.08.2013 out of milling in a raw stage was laying on the floor of the milling house. It was mixed with husk, kunda, sand other materials which were yet to be cleaned. In case of bran the sale to the tune of 90 qtls affected on the day of survey i.e. 21.08.213 was not deducted from the opening balance in order to arrive at closing balance. The said sale of bran has been effected to a VAT registered dealer M/s. Bargarh Rice Miller Consotorium Ltd. vide Tax Invoice No. 1121, dt.21.08.2013, bran 90 qtls. for ₹ 94,500/- which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that at the time of survey the person present namely Sri Deepak Sharma has categorically stated in his recorded statement that the stock inventory has been taken on eye estimate and there should not be such difference of stock. On the facts and circumstances of the case as stated in the foregoing paragraphs alongwith various documents/evidences produced before the lower authorities the undisputed facts emerges that whatever the stocks of paddy and rice are found at mill premises belong to the principal OSCSC/MARKFED and not of the assessee. That the ownership of such stocks kept in the mill premises are with the Principal and not the assessee it being only a Custom Milling Agent. Further for this purpose the assessee maintains stock register of paddy rice, which have been checked by Food Supply Department, Government of Orissa from time to time with the actual physical stock in the mill premises, as can be well verified from the copy of stock register. One such checking was conducted by the Civil Supply Authority Officials on 21.08.2013 just five days before the date of survey, when no discrepancies, whatsoever, either in paddy account or rice account were noticed or report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s plying thus comes to ₹ 2,96,350 (i.e., 4,84,100 1,87,750). The learned Assessing Officer should have verified the accounts as well as the balance sheet Profit and Loss account, when produced before him. In the remand report, the Assessing Officer has not denied the above facts but stated that this income has not been shown separately anywhere in return of income and therefore, submission of the appellant cannot be accepted. Further the assessee contended before the learned CIT(A) that no incriminating material regarding bus plying activities of the assessee were found during the course of search survey. Considering the facts and circumstances of the case and also considering the submissions of the assessee, the remand report of the Assessing Officer and the books of accounts produced before him, the learned CIT(A) has deleted the addition of ₹ 2,40,000 made on account of bus plying business observing in paragraph 10.3 in his order, which reads as under: 10.3. I have carefully considered the assessment order, remand report and submissions of the appellant. It is important to note here that this is an assessment after the search on group members. No incrimi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the learned CIT(A) may kindly be allowed. It is prayed accordingly. 9. After hearing both the sides and perusing the entire material available on record and the order of authorities below, we find that the AO has made additions on different heads which has been deleted by the CIT(A) after considering the submissions of the assessee and remand report received from the AO without discussing in details on the issues involved. Aggrieved thereby the Revenue is in appeal before us and the assessee has filed cross objection supporting to the order of CIT(A). Now, we shall decide the ground Nos.i ii. In these grounds the Revenue has challenged against the deletion of ₹ 7,72,400/- on account of sundry creditors. We noted from the paper book filed by the assessee that the sundry creditors were authorized representative of the assessee and acting on behalf of the assessee for procuring paddy. We further noted from page No.10 of the paper book para 20 of the affidavit filed by the assessee in which they categorically undertakes that he is doing only custom-milling for M/s Orissa State Civil Supplies Corporation Ltd.(OSCSC Ltd.) besides working also as agent of MARKFED, NAFED, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the confirmations/declarations filed by the assessee cannot be relied on. The l.d CIT(A) has alleged upon the Assessing Officer that the AO without calling the creditors has submitted the remand report. The assessee had filed name, address, Aadhar Card, ledger copy of the creditors before the CIT(A). If the Assessing Officer has not discharged his duty properly then in this circumstances the ld. CIT(A) should have exercised his powers provided under the provisions of Income Tax Act. The CIT(A) has co-terminus power as per the sections provided under the Income Tax Act. He should have called the creditors for their truthness and examined the issue. From the above observations, we are of the view that the assessee has provided details of the creditors, which should have been examined by both the authorities below but they did not do so for proving the genuineness of the creditors. As per our considered opinion, the assessee discharged his liability as cast upon him and now the duty shifted on the revenue authorities for the verification of the genuineness of the creditors, which are lack in this case. In the second round of proceedings before the Assessing Officer, he could have exer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plying. Accordingly, we restore the ground Nos.iii, iv, xii xiii to the file of Assessing Officer for fresh adjudication. Thus, ground Nos. iii, iv, xii xiii are allowed for statistical purposes. 13. Ground Nos.v,vi,vii viii relating to deletion of addition of ₹ 83,62,872/- on account of sale suppression of rice bran. 14. In this regard, ld. DR submitted before us that in ledger account of M/s Maharajan Foods Products in the books of Shree Shyam Products, there are all the cash receipts for the month of April, May June 2013. As there are no cheque payments, the unaccounted sale of rice bran to Shree Shyam Products has not proved. The said documents were found from the premises of the assessee which is a copy of ledger account maintain by Shree Shyam Products and Radhey Krishna in the name of Maharaja Food Products, which has been marked as MFP-30. It was the duty of the assessee to rebut the same but he could do so. After long time he filed affidavit which cannot be accepted. He also referred to Section 292C of the Income Tax Act 1961. Therefore, the AO has rightly made the addition on account of suppression of sales, which has not been recorded in the books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but the actual production is 5-5.5% and has also stated that bran have been purchased and sold to different parties also. 16. It was the duty of the assessee to rebut the documents found regarding cash sales of bran. No retraction was made by Shri Deepak Sharma (Manager) till date as well as by the assessee. If the statements were not true then the assessee should have retracted immediately before the concerned authorities. The affidavits filed by Sanjay Sharma placed in the paper book at pages 51 52, is also not acceptable. Merely filing of the affidavit without any corroborating evidences in the contents of the affidavits ,are not acceptable. Our this view is supported by the decision of Hon ble Supreme Court in the case of M/s Mehta Parikh and Co. Vs. CIT 1956 AIR 554 (SC). During the assessment proceedings, the AO has provided ample opportunity to the assessee for explaining the matter but the assessee did not do so. It was not the duty of the Assessing Officer to call Shri Shyam Products Radhey Krishna for cross examination as alleged by the assessee that the natural justice has been followed by the assessee because the documents were found in the premises of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. DR that the assessee was unable to explain the shortage of stock of paddy and bran and the excess of stock of rice and broken rice during the assessment proceedings as well as remand proceeding before the AO, therefore, the AO has rightly made the addition. On the other hand, ld. AR submitted that at the time of survey the person present namely Sri Deepak Sharma has categorically stated in his recorded statement that the stock inventory has been taken on eye estimate and there should not be such difference of stock. On the facts and circumstances of the case as stated in the foregoing paragraphs alongwith various documents/evidences produced before the lower authorities the undisputed facts emerges that whatever the stocks of paddy and rice are found at mill premises belong to the principal OSCSC/MARKFED and not of the assessee. That the ownership of such stocks kept in the mill premises are with the Principal and not the assessee it being only a Custom Milling Agent. Further for this purpose the assessee maintains stock register of paddy rice, which have been checked by Food Supply Department, Government of Orissa from time to time with the actual physical stock in the mill ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as kept lying in the row. The assessee has also alleged that the stock/inventory has been counted by the search team only on the basis of eye estimation but not actual weighment of stock of paddy/rice/bran/husk etc. Therefore, considering the totality of facts and circumstances of the case, we allow 20%(twenty percent) relief to the assessee on the total addition made due to there may be difference between eye-estimation for stock taking and actual weighment of the stocks found and the rates applied by the revenue authorities and uphold 80%(eighty percent) of the addition made by the AO in this regard. Accordingly, we are not in agreement with the observations made by the CIT(A) deleting the additions made by the AO. Thus, the ground Nos. ix, x xi are partly allowed to the extent as indicated above. 20. Since, we have partly allowed the appeal of the Revenue, therefore, the cross objection filed by the assessee supporting to the order of CIT(A) has become infructuous and the same is hereby dismissed. 21. In the result, the appeal of Revenue is partly allowed for statistical purposes and cross objection filed by the assessee is dismissed. Order pronounced in the open cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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