JYPORE MANUFATURING JEWELLERS PVT. LTD.,JAIPUR vs. JCIT(OSD), JAIPUR

ORDER

PER R.P. TOLANI, JM

Revenue ground for AY 2006-07 ‘’1. On the facts and in the circumstances of the case, the ld. CIT(A), Ajmer has erred in deleting trading addition of Rs. 49,48,340/- despite the fact that rejection of books of account has been upheld by him on the basis of earlier decision of ld. CIT(A) who sustained the trading addition of Rs. 50,000/- only, though the fact is that the rejection was upheld on the basis of seized documents.

2. On the facts and in the circumstances of the case, the ld. CIT(A), Ajmer has erred in not taking cognizance of various discrepancies pointed out by the AO.

Assessee's common Ground No. 2 for AY 2008-09 and 2009-10

1. Under the facts and circumstances of the case the Learned CIT(A) has erred in sustaining the addition of Rs 15,63,530/- by applying GP rate of 30.36% as against 15.55% for AY 2008-09 and addition of Rs. 1,09,37,185/- by applying GP rate of 33% as against 11.35% for AY 2009-10 declared by the assessee for unaccounted sales based on the P&L account which is not controverted.

1. Revenue's Grounds for AY 2008-09

‘’On the facts and in the circumstances of the case, the Learned CIT(A), Ajmer has erred in deleting trading addition of Rs. 21,68,172/- despite the fact that rejection of books of account has been upheld and ignoring the fact that on unaccounted sales, G.P. rate has to be higher because of evasion of local taxes and other cesses.’’ 2.1 Brief facts are - a search was conducted on 08-09-2009 in Bank locker no. 1004 standing in the name of one Shri Govind Dev/Shri Ram, which was owned by Shri Radha Mohan Agarwal (director) as belonging to assesee company. Consequently, notice u/s 153A was accordingly issued by the Deputy Commissioner of Income Tax, Central Circle – 3.

During the pendency of proceedings u/s 153A, ld. AO again dropped proceedings u/s 153A and initiated proceeding u/s 153C by issue of notice dtd. 19.07.2011. Though proceedings were taken further under the notice issued u/s 153C however, the impugned assessments are ultimately figures.

2.2 Aggrieved by the assessments orders, first appeals were preferred, ld. CIT(A) passed respective orders giving part relief to assessee.

Aggrieved on respective grounds both the parties are before us agitating grounds as mentioned above.

2.3 Ld. Counsel for assessee at the outset challenged the legality of proceedings u/s 153C by contending that:

"Satisfaction note for initiating proceeding u/s 153c of the IT Act In the case of M/s Jypore Jewellery manufacturing Pvt. Ltd.,1&2,Ratan Shikha, Near Gokkle Park, Janta Colony, Jaipur PAN –AAACJ4640C for the A.Y.2004-05 to 2009-10. A search was conducted in the case of Private Vaults Group, jaipur on 08/09/2009 based on search in the case of sh. DD. Modi Group. Certain Lookers in private Safe Deposit Vaults were identified which were suspected to be belonging to this group. The warrant was issued in the name of locker owners i.e. Shri Govind Dev and Shri Ram, 26, Bani Park, Jaipur on the basis of address available with the vault operator. The D.D. Modi Group disownered these lockers.

The following assets were seized from the locker as per panchnama prepared during search – Sr.No. Assets seized Seized/Impounded documents 1000 $ (USA Dollars) 1. Annexure AS-1 Exhibit 1 to 42 jewellery – Rs. 93,63,209 Statement of Ms. Usha Rani was recorded u/s 132(4) of the Income Tax Act, 1961. In the statement she admitted the locker was in the name of Shri Govind Dev and Shri Ram 26, Bani Park, Jaipur. Since the original search was initiated in the name of above named persons, the proceeding u/s 153A of the Income Tax Act, 1961 were also initiated in their name. Notice u/s 153A of the Income Tax Act, 1961 was issued to Sh. Govind Def and Shri Ram, 26, Bani Park, Jaipur which returned by postal authorities with the remark "incomplete address". During the period from the date of serach to passing of this order no person named Shri Ram and Sh. Govind

6 M/s. Jypore Manufacturing Jewellers (P) Ltd. vs. JCIT (OSD), Central Circle- 3 Jaipur . Dev were forward to claim the ownership of contents of the locker no. 1004 in Ganpati Plaza. On the other hand Sh. Radha Mohan Agarwal, Director of M/s Jypure Jewellery Manufacturing Pvt Ltd. 1 & 2, Ratan Shikha, Near Gokhale Park, Janta Colony, Jaipur filed a letter dated 10.09.2009 before the investigation wing of the department claiming the ownership of the contents of the locker of this company. His statement were recorded dt 23.09.2009 and 25.09.2009 u/s 131 of the Income Tax Act, 1961 and in the statement he admitted oath that the locker no. 1004 searched was hired by him and the documents/assets were admitted property of the company. In view of above stated fact the proceedings initiated in the name of Shri Ram and Sh. Govind Dev have been dropped bring in- fructuous. On the other hand proceeding u/s 153C of the Act is initiated in the case of M/s Jypore Jewellery Manufacturing Pvt. Ltd., 1 & 2, Ratan Shikha, Near Gokhele Park, Janta Colony, Jaipur (PAN – AAACJ4640C) which satisfied the terms of issue of notice under that section."

2.4 The perusal of these facts raises many jurisdictional issues about the legality of impugned assessments as under:-

(i) Original notice u/s 153A was issued without there being any valid warrant or search on assessee. Therefore, any assessment u/s 153A is illegal. (ii) No satisfaction has been recorded while completing 153A assessments in the case of Modi group as contemplated by sec. 153C. Similarly there was no assessment in the case of Shri

7 M/s. Jypore Manufacturing Jewellers (P) Ltd. vs. JCIT (OSD), Central Circle- 3 Jaipur . Govind Dev as the 153A proceedings were dropped in that case, consequently there is no valid satisfaction in this case also.

(iii) The new satisfaction about initiating 153C satisfaction is silent regarding the pending proceeding initiated u/s 153A with the issue of notice on 29.12.2009 in the case of the assessee.

(iv) The proceedings though are initiated u/s 153C the assessments have been completed u/s 153A rws 143(3) as is clear from the respective orders of ld. AO and CIT(A). (v) In these circumstances the Learned Assessing Officer erred in issuing notice u/s 153C when the proceedings u/s 153A were already pending. Besides ld. AO has erred in holding that the notice issued u/s 153C satisfy the terms laid down in this behalf. (vi) The proceedings are continued u/s 153C but the assessment is completed u/s 153A despite consciously dropping the notice u/s 153A. (vii) Assessment u/s 153A and 153C are totally different and mutually exclusive, an assessment cannot be framed in continuation of both notices and similarly cannot be concluded u/s 153A if proceedings are undertaken u/s 153C.

The relevant provisions for section 153C pre-suppose existence of the person referred to in section 153A. In other words there has to be a person in whose hands action u/s 153A is taken. In the case of the assessee there 153A in whose hands a satisfaction has been recorded for initiating proceedings u/s 153C in assessee’s hands. Ld. AO has made a mess of the whole legal proceedings by issuing notice u/s 153C when already proceedings u/s 153A were in progress. In these circumstances the proceeding ostensibly taken u/s 153C and concluded u/s 153A are untenable, bad in law and in stark contravention of relevant provisions. and Therefore, the impugned assessments are vitiated by lack of proper jurisdiction and deserve to be quashed. Reliance is placed on following judicial precedents in support of these propositions: –

(i) Jindal Stainless Ltd. Vs. Assistant Commissioner of Income Tax (2009) 122 TTJ 902 (Del)

It has been held in this case by the Hon’ble Tribunal that framing of assessment u/s 153A in place of 153C or vice versa is illegal. Such defect in framing the assessment is a jurisdictional defect which cannot be cured and assessment has to be held as invalid because the Assessing Officer did’nt have any jurisdiction to assess the assessee without adopting the procedure laid down in the relevant section.

(ii) CIT Vs. Shital Prasad Kharag Prasad (2005) 196 CTR 162 It is further submitted that a mistake of framing assessment u/s 153C in place of 153A is not a technical mistake rectifiable with reference to section 292B. This action

9 M/s. Jypore Manufacturing Jewellers (P) Ltd. vs. JCIT (OSD), Central Circle- 3 Jaipur . condones invalidity which arises merely by reason of any mistake, defect or omission in a notice. But framing of assessment under the wrong section goes to the very root of the matter. It is well settled that an Assessing Authority gets jurisdiction to reopen a concluded assessment only after serving a valid notice on the assessee. (iii) Similar decision was rendered by the Calcutta High Court in the case of Sun Rolling Mills Pvt. Ltd. Vs. ITO 160 ITR 412 wherein it was held that section 292B does not empower to ITO to treat a proceeding taken u/s 147(b) as proceeding u/s 147A. This is not a mere technicality. It is a question of jurisdiction unless the conditions precedent are fulfilled no proceeding can be initiated.

The ratio of the aforesaid cases makes it clear that in the cases where conditions precedent for issuing notice u/s 153A or C are not fulfilled, they are liable to be quashed. Since in assessee’s case the Learned Assessing Officer erred in assuming valid jurisdiction u/s 153A or C, the impugned assessments purporting to be completed u/s 153A are ab-initio void and deserve to be quashed.

2.5 Apropos merits ld. Counsel contends that regular returns for all the impugned years were filed and regular assessments were framed by making some routine GP additions which were reduced or deleted in appeals. From the above referred locker papers reflecting regular unaccounted transactions mentioning details of sales and purchases along impugned assessment proceedings in order to determine the profits from unaccounted papers, assessee prepared complete accounts of sale, purchases, P &L a/c and determined the unaccounted business. Same were produced and verified by ld. AO and no inconsistency or discrepancy is pointed out therein. Thus on the basis of papers and jewelry stock found in the locker year wise unaccounted profit earned by assessee was worked out as under and offered as income in search returns

Financial Year Income declared 2006-07 21396 2007-08 1231754 2008-09 4391086 2009-10 1888254 7532490 It was further submitted that the unaccounted profits were found in the form of asset i.e. unaccounted jewelry stock found in the locker. The jewelry was also wrongly valued by ld. AO at market rate at Rs. 93,63,209/- whereas the same should have been valued at cost whose valuation was explained by the assessee at Rs. 75,32,490/-. Since ld. AO for working out unaccounted profits and stock, thus on record the working of year wise unaccounted income remains unchallenged. It is trite law that evidence collected during the search is to be given holistic effect. It cannot be used by ld. AO on cherry picking basis by refusing to give the benefit of evidence which supports assessee’s working. Ld. AO without objecting to the a/cs of unaccounted transactions however raised the questioned about lesser GP from undisclosed business as compared to GP on the sales recorded in regular books. Assessee categorically submitted that it was having two distinct business operations one of regular show room involving huge investment; the higher GP from regular show room was attributable to the cost of capital deployment.

Whereas unaccounted business was carried on without capital cost, on existing market reputation for faster and quicker turn over in a competitive fast rolling jewelry trade. Such unaccounted transactions presupposed lesser GP and faster turnover as the assessee could not have maintained huge unaccounted inventory and indulged in bargaining. In regular jewelry show room business normally regular stock rotation by sales is hardly 2 times. Whereas unrecorded sales record revealed the in unaccounted sales in real terms the net profit was more, which was the real aim. Assessee random basis demonstrated that where on total sales of Rs. 1,05,60,429/- the profit was of Rs. 16,42,616/- which is 15.55% and in the subsequent year when the turnover became Rs. 5,05,49,546/- the GP rate falls down to 11.36%. The GP rate from unaccounted business though looked lesser than regular books but the comparative net profits are more since there is no expenditure. It is further contended that:

(a) The unaccounted sales during the sale period are much higher than the regular sales, which is solely due to factor of higher and faster turnover and lesser GP.

(b) It is further noticed that although GP is better in regular sales but ultimately the regular sales disclose very less NP whereas unaccounted sales the GP is lower but average net profit rate is around 8.68% which supports the assessee’s contentions.

© The GP rate is comparatively low firstly on the ground that turnover is just the double. Secondly the assessee compromises in the profit in the unaccounted sales as the expenses on unaccounted sales are almost negligible and therefore at the end net profits are more.

Reliance is placed on:

13 M/s. Jypore Manufacturing Jewellers (P) Ltd. vs. JCIT (OSD), Central Circle- 3 Jaipur . (i) Abhishek Corporation Vs. Deputy Commissioner of Income Tax 63 TEJ 651 (Ahd) It was held that only net profit rate can be applied on unaccounted sales/receipts. (ii) Further in the case of Moolchand Kumawat & sons Vs. DCIT Ajmer M.A. 93/JP/2008 out of ITSSA No. 24/JP/2005 dated 20.02.2009 Taxworld Vol. XLII page 241 the Hon’ble ITAT Jaipur Bench Jaipur held as under –

(a) Sales do not represent the income of the assessee and only the profit thereupon can be taxed. (b) Same profit rate as disclosed by the assessee shall have to be applied on unrecorded sales.

(iii) CIT vs. S.M. Omer (1993) 201 ITR 608

(iv) Income Tax Officer vs. Gurubachhan Singh J. Juneja (1995) 55 ITD 75 (Ahd. TM)

2.6 Ld. AO however, did not controvert the books results of unaccounted business however by an ad hoc and summary approach mechanically adopted the GP rate of regular business as GP of unaccounted business. Thus the addition is based neither on any objective consideration nor on the analysis of material made available to AO which remains uncontroverted. The arbitrary approach of department is clear assessee was disturbed which was appealed against, now the same GP is held as sacrosanct despite assessee’s unctroverted justifications. Thus whenever it suits the department, GP is accepted or rejected on ad hoc basis, on summary assumption and on free will, which is not permissible in law as held by various judicial pronouncements.

2.7 In view of this also the Learned Assessing Officer was not justified in applying of GP rate of regular sales on unaccounted sales for which clear profit working was provided by assessee.

2.8 It is a case where seized material for unaccounted business is found from the locker, which is duly quantified by assessee and not controverted by ld. AO, there is no room is left for further estimation beyond the incriminating material without pointing out inconsistencies in the relevant working. The profits so arrived at cannot be discarded summarily relying on higher GP from regular business which has totally different business module. It amounts to assuming oranges as apples in order to levy more taxes. Learned Assessing Officer has not found any defect whatsoever in the working of the unaccounted profits, any reason and arbitrarily adopting higher GP figure only on presumptions and conjectures. The following case laws are quoted in support of this proposition:-

(i) Assistant Commissioner of Income Tax vs. Radhey Shyam Poddar (HUF) (2004) 86 TTJ 558 (Asr.) (ii) Assistant Commissioner of Income Tax Nitin Mukesh Mathur (2004) 88 TTJ 220 (Mum) (iii) Bajrang Lal bansal vs. DCIT (2005) CIT 94 TTJ 1071 (Del) (iv) CIT vs. C.L. Khatri (2005) 197 CTR 44 (MP) (v) Jagdish Duggal vs. Assistant Commissioner of Income Tax (2009) 24 DTR 174 (Chd. Trib) (vi) Sukh Ram vs. Assistant Commissioner of Income Tax (2006) 99 ITD 227 (Ahd.) (vii) Anand Autoride ltd. vs. Jt. CIT (2006) 99 ITD 227 (Ahd) (viii) Kantilal Prabhudas Patel vs. Dy. CIT (2005) 93 ITD 117) (Indore TM) (ix) Smt. Rajrani Gupta vs DCIT (2000) 72 ITD 155 (Mum) (x) Dr. R.M.L. Mehrotra vs. Assistant Commissioner of Income Tax (1999) 64 TTJ 259 (All)

2.9 It is further submitted that following judicial precedents have held that incriminating material should be applied in totality and not on piece meal basis to favor the revenue, the seized evidence is to be accepted in tails you lose is alien to the principles of income tax law.

(i) CIT vs. Indio Airways Pvt Ltd (2012) 79 DTR 289 (Del) (ii) Vivek Kumar Kathotia vs. DCIT (2013) 142 ITD 394 (Kol. Trib) (iii) Kanti Lal & Brothers vs. Assistant Commissioner of Income Tax 52 ITD 412 (Pune)

2.10 Apropos the estimation of GP declared in regular books, ld. Counsel further contends that the book results have been examined in past making some additions, which on appeals have become final. No incriminating material is found as there was no search on assessee.

However ld. AO again reviewed concluded book results and made GP additions qua the regular books. Thus without any defects in the regular books of accounts GP rate have been re disturbed. The action of the Learned Assessing Officer in applying GP rate of 35% both on accounted and unaccounted turnover is untenable, unlawful and unjustified. It appears that the Learned Assessing Officer was somehow or other under compulsion to increase the income of the assessee to the alleged surrender of income of Rs. 2 crores during 131 statement dtd. 23.09.2009. The details. This unverified statement was given only to avoid the pressure of search related proceedings, insistence of revenue authorities; on correct verification of papers, working and accounts revealed undisclosed income to the extent of Rs. 75,32,490/- only which is offered by assessee. Law recognizes the right of the assessee to retract an admission made without support of proper details; by producing cogent reasons; assessee produced the same in the form of proper accounts and P & L a/c of unaccounted record found from the locker which has not at all been controverted by any authority below. The following case laws are quoted for the proposition that assessee based on cogent reasons and material can amend, retract or withdraw any surrender of income:-

(a) Pullanguegode Rubber & Produce Co. Ltd. Vs. State of Kerala 91 ITR 18 (Supreme Court) An admission is an important piece of evidence but it cannot be said that it is conclusive and it is open based on evidence for the person who made the admission to show that it is incorrect. (b) Jain Trading Co. v/s ITO (2007) 17 SOT 574 (MUM) Addition on the basis of admission made during survey retracted during assessment. An assessee offering additional

18 M/s. Jypore Manufacturing Jewellers (P) Ltd. vs. JCIT (OSD), Central Circle- 3 Jaipur . income during the course of survey is not bound by the said offer for all times to come ---- During survey assesses offered an additional income of Rs/- 25 lac on being pointed by the survey party that there was under statement of stock. Assesses did not declare such income in the IT return A.O. made addition of Rs. 25 Lac. Not justified. (c) Kailash Ben Mohanlal Choksi v/s CIT (2008) 14 DTR (Guj) 257 It is too much to give credit to a statement recorded at midnight where a person may not be in a position to make any correct and conscious discloses” Disclosure statement recorded at odd hours cannot be considered to be a voluntary statement. . (d) Contech Transport Service (P) ltd Ors V/s ACIT (2009) 19 DTR 191 (Mumbai) 28-11-08 No addition can be made only on the basis of admission in statement V/s 132 (4) (e) Chitra Devi V/s ACIT (Jodhpur Branch) (2002) 77 TTJ (Jd) 640 Statements recorded during search are not evidences found during search. Addition cannot be made on the basis of statement alone. (f) Ajit Chintaman Karve V/s I.T.O. (2009) 311 ITR (AT) 66 (Puna) ITAT Branch . That merely because an offer was made having no cogent basis or approval of law that should not stop a taxpayer from correcting his mistake. It was the duly of the A.O. to tax only the legitimate amount from a taxpayer. assessee is maintaining all the books of accounts including cash book, bank books, journal book, Ledger, bills & voucher and stock register along with their supporting as prescribed U/s 44AA of the Income Tax Act, 1961. The books of accounts are maintained on mercantile system of accounting. The books of accounts are audited. The auditors have not made any adverse remarks regarding the maintenance of the books of accounts. The trading results of the assessee are reflected in the following table –

A.Y. Turnover Gross Profit G.P. Rate 2008-09 63176638 10983115 30.36% 2007-08 35823089 13216344 36.89% 2006-07 40047615 7015945 17.52% 2005-06 20996585 6268319 29.85% 2004-05 25826192 7418021 28.72% 2003-04 14135008 32.02% 2.12 The perusal of the aforesaid table reveals the following –

(a) The turnover during the year has increased by almost 100% in comparison to Assessment Year 2007-08. Therefore Learned Assessing Officer was wrong in comparing the trading results with Assessment Year 2007-08. It is common

20 M/s. Jypore Manufacturing Jewellers (P) Ltd. vs. JCIT (OSD), Central Circle- 3 Jaipur . knowledge that increase turnover is achieved with decrease in margin of profit. Hence the GP rate was low.

(b) It would be seen from the aforesaid table that trading results vary from year to year. This is because the jewellery market is globally governed. Hence the margins of profits vary as the same are not in the hands of the assessee. It is also worth noticing that the GP rate disclosed during the year is better than Assessment Year 2004-05 to 2006-07 and it is only lower in comparison to Assessment Year 2007-08 the same is because of the increase of turnover.

(c) The Learned Assessing Officer is not justifying in rejecting the books and estimating the profits on the ground that unaccounted turnover was found in the papers and locker. Separate working of the profits on such papers has been done and income has been surrendered accordingly. So far as regular turnover is concerned there was no case either for rejecting the trading results or for estimating the same without any basis.

During the course of impugned assessment proceedings all these books of accounts were produced before the Learned Assessing Officer and no serious defect was pointed out. The Learned Assessing Officer is wrong in observing that no stock register was maintained. The assessee has maintained quantitative details of stock, which was also produced. When quantitative details have been maintained, no incriminating material was reviewing the trading result and estimate the regular GP which was already subject matter of appeals. The defects pointed out by the Learned Assessing Officer are superficial and have no significance on profit earning. In the absence of specific defect there was no justification with the Learned Assessing Officer for rejecting the books of accounts. The provisions of section 145(3) have therefore been wrongly invoked.

2.13 It is further contended that rejection of accounts is no ground for application of higher GP without any basis as rejection of books does not give a license for making presumptive trading addition unless something specific is pointed out. The Learned Assessing Officer neither pointed out any serious defect in the books of accounts nor any comparable case for applying GP rate of 35%. Reliance is placed on the following case laws:

I. S. Sarabhaiah Setty & Sons V. CIT[1967] 64 ITR 175 (AP).

Assessee must be given opportunity to rebut estimate. Where the ITO did not state the basis of the estimate and no opportunity was given to the assessee to rebut that basis, his order was liable to be set aside.

II. Yaggina Veeraraghavulu & Mavuleti Sanaraju & Co. V. CIT[1966] 62 ITR 528 (AP).

22 M/s. Jypore Manufacturing Jewellers (P) Ltd. vs. JCIT (OSD), Central Circle- 3 Jaipur . Where after rejecting the accounts of the assessee, an estimate of the turnover and gross profit is fixed to the detriment of the assessee, the assessee is entitled to know the basis and also to an opportunity to rebut the same.

III. Seth Nathuram Munnalal V. CIT 25 ITR 216 (Nag.)

If the assessee fails to satisfy the ITO as to the correctness of the profits returned by him, it is open to the ITO to take a higher percentage consistent with the state of trade in the locality or with any special circumstances of the assessee which warrant higher rate of profits. However, the ITO must disclose the basis and manner of computation and make his order a speaking order.

IV. Mysore Fertilizer Co. V. CIT 59 ITR 268 (Mad.) The law says that the ITO shall make the assessment to the best of his judgment; it means that he must make it according to the rules of reason and justice and not according to private opinion, but according to law and humour, and that the assessment is to be not arbitrary, vague and fanciful but legal and regular. 2.14 In view of these submissions it is contended that the above additions deserves to be deleted on merits also.

2.15 Ld. DR on the other hand supported the orders of AO and contends that:- i. Looking at the facts about complexities of locker’s ownership, ld. AO recourse to legal provisions as and when the facts unfolded. Therefore, the 23 M/s. Jypore Manufacturing Jewellers (P) Ltd. vs. JCIT (OSD), Central Circle- 3 Jaipur . impugned assessments cannot be held as bad in law. ii. Assessee by a valid statement u/s 131 surrendered the income of Rs. 2 crores to be offered, the doctrine of promissory estoppels applies to it. iii. Ld. AO has powers to estimate the GP of unaccounted business. His estimate is reasonable in as much as for unaccounted turnover the GP rate of regular business has been applied. iv. Apropos the estimation of GP from regular books, it is contended that in search assessment AO has plenary powers of assessment which includes rejection thereof and estimation of GP.

2.16 Ld. Counsel in rejoinder contends that all the facts were in the knowledge of ld. AO, assessee cannot guide him in adopting a particular provision as neither it is under obligation to do so, nor the AO will comply with assessee’s guidance. Therefore, it was the statutory duty of ld. AO to adopt proper legal provisions. His onus of choosing appropriate legal provisions for initiation, continuation and concluding of assessments cannot be shifted on assessee. Besides if the proceedings are conducted on wrong jurisdictional premise, they are untenable and void proceedings, as held by catena of judicial proceedings. In the name of search proceedings AO cannot review his own orders when no incriminating material qua the assessee’s regular books is found as there was no search on assessee. Qua unaccounted turnover when on the basis of determined, it cannot be summarily discarded and additions made on wrong comparison based on gross presumptions.

2.17 Apropos surrender, assessee has cited various case laws to the effect that an unverified surrender can be amended based on cogent material. It has been duly discharged by the assessee and the cogent evidence has not been controverted at all by authorities below. In these circumstances the promissory estoppels is not applicable to assessee as its accounts remain unrebutted as mentioned above.

2.18 We have heard the rival contentions and perused the material available on record. Apropos the validity of assessments we find that original notice was issued u/s 153A and there as neither any warrant or search on assessee. Similarly while issuing notice u/s 153C no satisfaction in this behalf in the case of Modi group nor there was any assessment in the case of Shri Govind Dev as the 153A proceedings were dropped in that case. The satisfaction recorded by AO initiating 153C is silent regarding the pending proceeding initiated u/s 153A by notice dtd.

29.12.2009 in the case of the assessee. The proceedings though purported 143(3) as evidenced by the respective orders of ld. AO and CIT(A). This leads to a legal situation where during the pendency of 153A proceedings notice u/s 153C is issued. To further confound the situation the proceedings are purported to be continued u/s 153C but the assessments are completed u/s 153A despite consciously dropping the notice u/s 153A. We find merit in the argument of ld. Counsel that assessments u/s 153A and 153C are independent and mutually exclusive, an assessment cannot be framed in continuation of both notices and similarly cannot be concluded u/s 153A if proceedings are undertaken u/s 153C. In view of the facts, circumstances and judicial precedents cited above we hold that impugned assessments are untenable and bad in law. Our view is fortified by Jindal stainless steel ltd. and Shital Prasad Kharag Prasad (supra).

2.19 Apropos merits also we are of the view that regular trading results of the assessee’s business were already subject matter of appeals, there was no search on his show room, and therefore, no incriminating material was found. By estimating the GP from regular business ld AO has reviewed settled position without any incriminating material in this behalf, which is not permissible in search assessments. In view thereof we business.

2.20 Apropos the income declared from unaccounted business it has not been disputed that assessee filed complete record of year wise and transaction wise accounts of material found in the locker. No adverse comments have been offered by ld. AO in this behalf. Regarding comparatively lesser GP from unaccounted business than regular business assessee offered proper reasons which have not been even considered by AO. The GP has been enhanced not based on any objective considerations but by summarily relying on estimated GP of regular business. In our considered view the incriminating material should be considered in totality and when assessee has submitted copious accounts for incriminating material it cannot be discarded summarily as done by ld. AO. Since there is no rebuttal in respects of accounts of unaccounted income furnished by the assessee, the profits declared deserve to be accepted in given facts and circumstances. Similarly it is not disputed that value of stock of jewelry found from locker was taken by ld. AO on market price whereas as per settled accounting principles sme should have been valued at cost. Consequently valuation adopted by assessee is 3.0 In the result appeals filed by assessee are allowed and that of revenue are dismissed.

Order pronounced in the open court on 22 /01/2016.