M/S SPACEWOOD FURNISHERS PVT. LTD.,,NAGPUR vs. D.C.I.T. CENTRALCIRCLE 1(3), NAGPUR

1 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SANDEEP GOSAIN, JM & SHRI ARUN KHODPIA, AM ITA No. 6/NAG/2017 Assessment Year : 2010-11 M/s. Spacewood Furnishers Pvt. Ltd. Vs. The DCIT T-48, MIDC, Hinga, Central Circle 1(3) Nagpur Nagpur PAN No.: AACCS 4955 R Appellant Respondent

Assessee by: Shri Rachit Thakar (Adv.) Shri S.C. Thakar (Adv.) Revenue by : Shri Piyush Kolhe (CIT-DR) Date of Hearing: 25/04/2022 Date of Pronouncement: 28 /04/2022 ORDER PER: SANDEEP GOSAIN, J.M. This is an Appeal by Assessee for A.Y.2010-2011 against the consolidated order of learned CIT(A)-3, Nagpur for A.Y.2004-05 to A.Y.2010-11 dt.27.10.2016. Grounds taken by the Assessee in present Appeal are as under :- “1] Learned C.I.T.(A) should have held that the impugned assessment U/s.143(3) for A.Y.2010- 11 was barred by limitation. 2] Learned C.I.T(A) erred in retaining the addition of Rs.10,43,150/- on the assumed ground that there is no dispute regarding differential stock of Rs.10,43,150/-. Said amount related to addition to stock of raw material which learned C.I.T.(A) himself has deleted. Thus retaining of addition of

2 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur Rs.10,43,150/- is a mistake apparent on the face of record and is also erroneous. 3] Assessee craves leave to urge additional grounds at the time of hearing as may be necessary.” 2. Assessee has taken additional ground vide application for additional ground dt.21.12.2021 which due to inadvertence had remained to be taken. C.I.T.(A) had dealt with the said issue, adjudicated the same and all relevant facts are already on record. Hence we have allowed the appellant to take the said additional ground which is as under :- “Learned CIT(A) erred in confirming the addition of Rs.8,62,294/- as unexplained cash.” 3 The facts of the case are that the Assessee is in the business of manufacture and sale of wooden furniture at Nagpur. There was a search and seizure operation at the business premises of the Assessee and at residential premises of the directors of Assessee-Company on 19.06.2009. In pursuance thereof the Assessee was called upon by notice u/s.153-A to file the returns for six years preceding the assessment year relevant to previous year in which search took place. Thus the Assessee was called upon to file the returns for six assessment years viz. A.Y.2004-05 to A.Y.2009-10. No notice u/s.153-A was issued for A.Y.2010-11 as it was not covered in the said six years referred to in

3 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur 153-A(1)(b). Assessee in normal course voluntarily filed the return for A.Y.2010-11 u/s.139(1) on 27.09.2010. A.O. thereafter issued the notice u/s.143(2) on 02.09.2011 and notice u/s.142(1) on 18.10.2011. A.O. thereafter completed the assessment in normal course u/s.143(3) by order dt.10.07.2015 on total income determined at Rs.3,91,97,660/- as against returned income of Rs.3,39,26,940/- by making two additions viz. (i) Rs.8,62,294/- as unexplained money found during search and (ii) Rs.44,08,422/- as excess stock as discussed in para 11 of the assessment order. It is this assessment order for A.Y.2010-11 made u/s.143(3) by order dt.10.07.2015 that is challenged by the Assessee as barred by time as the time provided u/s.153(1) to complete the regular assessment u/s.143(3) was two years from the end of the relevant assessment year. Thus the assessment for A.Y.2010-11 could not be made beyond two years from the end of relevant asst. year i.e. 31.03.2011, i.e. the assessment could not be made beyond 31.03.2013. However the assessment u/s.143(3) for A.Y.2010-11 was made on 10.07.2015 and hence the same was barred by limitation. Before dealing with the said issue it is necessary to state a few more facts. Assessee and it‟s directors had filed Writ Petition before Hon‟ble High Court of Mumbai, Bench at Nagpur on 20.04.2010 challenging 132(1) action

4 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur dt.19.06.2009 and notices u/s.153-A issued in pursuance thereof for A.Y.2004-05 to A.Y.2009-10. There was no challenge of any nature whatever for A.Y.2010-11 i.e. the year in question, in the said Writ Petition. Nor was there any stay or injunction against the assessment proceedings for A.Y.2010-11. Nor the assessment for A.Y.2010-11 was pending on the date of search. Hon‟ble High Court by it‟s order dt.09.12.2011 annulled the search action u/s.132(1) and consequent notices u/s.153-A for A.Y.2004-05 to A.Y.2009-10. Department filed Appeal before Hon‟ble Supreme Court of India against above said order of the Hon‟ble High Court dt.09.12.2011. Hon‟ble Supreme Court by their order dt.13.05.2015 set aside and cancelled the order of Hon‟ble High Court and directed that the proceedings against Assessee will commence from the stage at which the same was interdicted by High Court by it‟s order dt.09.12.2011. Learned A.O. taking recourse to section 153(4) read with Explanation-1 issued notice u/s.142(1) on 01.06.2015 for A.Y.2010-11 calling upon Assessee to explain the difference between the cash physically found and as per books amounting to Rs.8,62,294/- as on 19.06.2009 i.e. the date of search and to explain the so called difference in value of stock of raw material and

5 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur finished goods calculated at Rs.44,08,432/- section 153(4) reads as under:- “(4) Notwithstanding anything contained in the forgoing provisions of this section, sub-section(2) of section 153-A and sub-section (1) of section 153-B, the order of assessment or reassessment relating to any assessment year, which stands revived under sub-section(2) of section 153-A, shall be made within one year from the end of the month of such revival or within the period specified in this section or sub-section(1) of section 153-A whichever is later.” 4. Assessee objected to the above said notice dt.01.06.2015 u/s.142(1) on the ground that the assessment for A.Y.2010-11 has become barred by time. It was stated that section 153(4) will apply to only those assessments which were pending on the date of search and consequently had abated due to search and which assessment had revived on annulment of search action by court. Assessment for A.Y.2010-11 was not a pending assessment on the date of search, nor the same had abated due to search nor the same revived on annullment of search. However the A.O. rejected the said objection of Assessee stating as under :- “Proceedings u/s.143(2) was initiated against the Assessee for A.Y.2010-11, consequent to the issue of authorization for search and execution of search. Since the High Court has explicitly ordered the authorization as bad and unsustainable and consequent exercise of search as

6 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur illegal, the proceedings for A.Y.2010-11 was also dropped/cancelled. However since now the Hon‟ble Supreme Court set aside the order of Hon‟ble High Court the proceedings u/s.143(2) for A.Y.2010-11 has also come to life. Further Hon‟ble Supreme Court has specifically stated that „the proceedings against the Assessee will now commence from the stage at which it was interdicted by the High Court‟. Due to Hon‟ble High Court‟s order, proceedings u/s.143(2) for A.Y.2010-11 was dropped. The same is now restored by the order of Hon‟ble Supreme Court. In view of the above, the objection of the Assessee is disposed off. He is requested to comply with notice u/s.142(1) issued for A.Y.2010-11.” 5. Assessee in Appeal before CIT(A) on this aspect reiterated that firstly the assessment proceedings for A.Y.2010-11 were going on in normal course even during the pendency of Writ Petition before Hon‟ble H.C. There was neither any challenge to asst. proceedings for A.Y.2010- 11 nor was there any injunction or stay against it. Secondly judgment of Hon‟ble High Court in cancelling the search action did not in any way affected assessment for A.Y.2010-1. Hon‟ble High Court cancelled search proceedings u/s.132(1) and cancelled notices u/s.153-A for A.Y.2004-05 to A.Y.2009-10. It did not say anything about assessment for .AY.2010- 11. High Court never interdicted the proceedings for A.Y.2010-11. Thirdly the A.O. who had issued notice u/s.143(2) on 02.09.2011 for A.Y.2010-11 should have completed the assessment in prescribed period of limitation. There was neither any challenge to proceedings for

7 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur A.Y.2010-11 nor was there any stay. He allowed the assessment for A.Y.2010-11 to get barred by time without any reason or perhaps on misconception of law or misunderstanding or misconstruing the provisions of law and the judgments and directions contained therein. 6. Learned CIT(A) rejected the submission of Assessee. He held in para 16.5 of his order that the proceedings for A.Y.2010-11 u/s.143(2) were also dependent upon the findings of Hon‟ble High Court in which the Assessee had challenged search action u/s.132(1). He further stated that there was material including finding relating to physical stock and other seized material which were subject matter of search and therefore subject matter of assessment for A.Y.2010-11. He further stated that the search was conducted on 19.06.2009 and F.Y.2009-10 is the specified previous year relevant to A.Y.2010-11 and that the statement of Assessee recorded during search and seized material and documents found during search are subject matter of assessment for A.Y.2010-11. Therefore on setting the order of H.C. by Hon‟ble Supreme Court and directing that the proceedings would now commence from the stage at which the same was interdicted the A.O. was justified in acting upon notice u/s.143(2) issued on 02.09.2011 and complete the assessment by order dt.10.07.2015.

8 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur 7. Before going to issue on merits of addition we will first dispose of the submission of Assessee that the assessment for A.Y.2010-11 made u/s.143(3) by order dt.10.07.2015 is barred by time. We have heard the parties, have gone through the written submission of Assessee and order of A.O. and learned CIT(A) and the reasons adopted by authorities below to hold that the assessment for A.Y.2010-11 is not barred by time. Learned A.R. had emphasised that the assessment year relevant to previous year in which search is carried out is not a part of the six years for which assessments are to be completed u/s.153-A. Hence for the assessment year relevant to previous in which search is carried out has to be completed u/s.143(3) or 144 as the case may be and hence the period limitation would be two years from the end of the relevant asst. year as provided in sec.153(1) of the Act and since the assessment for A.Y.2010-11 was not under challenge before Hon‟ble H.C. or Hon‟ble Supreme Court the assessment for A.Y.2010-11 should have been completed on or before 31.03.2013 and since the assessment for A.Y.2010-11 is made on 10.07.2015 the same is barred by time. While learned D.R. relying on CIT(A)‟s order emphasised that A.Y.2010-11 was a part of search proceedings as the relevant material found or seized or documents found during the search on 19.06.2009 would be relevant

9 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur and has to be considered for A.Y.2010-11 the same is part of the search proceedings and since search proceedings were under challenge before Hon‟ble High Court who cancelled the search action and Hon‟ble Supreme Court who cancelled the order of High Court annulling the search and directing to continue the proceedings from the stage they were interdicted by H.C.‟s order, the A.O. had jurisdiction to complete the assessment. In our view both the lines of argument one by learned A.R. stating that assessment for A.Y.2010-11 is barred by time and line of argument by learned CIT(A) for justifying the assessment for A.Y.2010-11 in time are both misdirected. However we agree with the final conclusion of learned CIT(A) that the assessment for A.Y.2010-11 is this case is within time, though for different reason. There is a specific provision in the Act itself viz. section 153B(1)(b) providing for limitation for the assessment year relevant to previous year in which search is conducted u/s.132 or requisition under sec.132-A. Section 153-B(1)(a) deals with the time limit for completion of assessment for six years falling in sec.153A(1) while section 153B(1)(b) provides for the time limit for completeness of assessment in respect of assessment relevant to previous year in which search u/s.132(1) is conducted.

10 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur 8. Thus when there are specific provision providing for limitation of different categories of assessment there is no need or scope to indulge into different lines of arguments and justify them by some reasoning. Section 153B(1)(b) which provides for limitation for the year of search reads as under :- “153B(1) Notwithstanding anything contained in section 153, the assessing officer shall make an order of assessment or reassessment - (a) in respect of each assessment year falling in six assessment years ……. (b) in respect of assessment year relevant to previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of two years from the end of the financial year in which the last of the authorization for search under section 132 or requisition under section 132A was executed.” 9. Thus there is a specific provision in the Act itself which provides for period of limitation for the assessment year relevant to previous in which search is carried out. In this case the search was carried out on 19.06.2009 for which relevant assessment year 2010-11. The time provided for the said year would be two years from the end of the financial year in which authorization was executed. The financial for 19.06.2009 would be F.Y.2009-10. Thus the time limit for A.Y.2010-11 would be 31.03.2012. However the Explanation to the said section

11 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur provides for exclusions of time under various contingencies. Clause (vii) of Explanation provides for exclusion of the following time. “(vii) the period commencing from the date of annulment of a proceedings or order of assessment or reassessment referred to in sub-section (2) of sec.153-A till the date of receipt of the order setting aside of such annulment, by the Commissioner.” 10. The proceedings u/s.132(1) were annulled by the High Court on 09.12.2011 and the said annulment was set aside by Hon‟ble Supreme Court on 13.05.2015. Thus the time between 09.12.2011 and 13.05.2015 is 3 years and 155 days which is required to be excluded. Last date for making assessment for A.Y.2010-11 u/s.153B(1)(b) was 31.03.2012. Adding 3 years and 155 days to 31.03.2012 would mean 05.07.2016. While the assessment for A.Y.2010-11 is made by A.O. on 15.07.2015 which is well within the time prescribed by law. Thus we hold that the assessment for A.Y.2010-11 is within time and not barred by limitation as argued by learned A.R. Accordingly we reject ground No.1 of the Appellant. 11. Now we take up the issues on merits. There are two additions in dispute. One is regarding Rs.8,62,294/- added as alleged unexplained money found on the date of search and other is of Rs.10,43,150/-

12 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur retained by CIT(A) out of the addition of Rs.44,08,422/- made by A.O. as unexplained or excess stock. 11.1 Relevant facts with regard to cash of Rs.8,62,294/- are that during the search on 19.06.2009 cash found was Rs.10,43,150/- while the cash recorded in books was Rs.2,35,956/-. When called upon to explain, the Assessee submitted that at the time of search itself it was explained that cash of Rs.4,20,000/- was received from Khatri Traders as advance for purchase of scrap on following dates viz. Rs.1,75,000/- on 13.06.2009 and Rs.2,45,000/- on 18.06.2009 (total Rs.4,20,000/-) and Rs.4,40,000/- was received from Sai Ispat (Sunil Thakur) also as advance for purchase of scraps on following dates viz. Rs.1,90,000/- on 14.06.2009 and Rs.2,50,000/- on 17.06.2009. Since this was merely an advance pending identification of scrap and determination value, the cashier Shri Bhatt had issued Kachha receipt on letter pad of the company and on identification of goods and ascertainment of price pucca receipts were issued which are duly recorded in books of accounts. It was submitted that on completion of search on 21.07.2009 the Assessee had immediately filed on 22.07.2009 the xerox copies of said Kachha receipt after obtaining them from those parties and which was also duly confirmed by the parties. It was also pointed out that

13 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur those two parties are regular buyers of scrap from the Assessee and the purchase during the year by Khatri Traders was Rs.5,57,195/- which is duly recorded in the books and similary purchase during the year by Sai Ispat was Rs.8,40,673/- which is duly recorded in books of account. Copies of their accounts was also filed. Both the parties are Income Tax Assessees. Learned A.O. rejected the explanation of the Assessee. He states that the receipts were given on letter pad. No carbon copy was found during the search. The confirmation given by parties on those xerox copies of kachha receipt do not contain PAN number. The contents of kachha receipt is in identical terms and that when the Assessee was issued summons on 06.07.2015 to produce parties on 08.07.2015 they were not produced on that date so holding he added Rs.8,62,294/- to the total income as unexplained money. 12. Before CIT(A) it was pointed out that the reasons given by A.O. for rejecting the Assessee‟s explanation was contrary to evidence and material and facts & circumstances of the case. Receipt of money from the said two persons was duly supported by kachha receipts. The fact that both of them are income tax assessees is not in dispute and is a matter of record. Merely not mentioning PAN number on kachha receipt is of no avail when in fact those two persons are admittedly income tax

14 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur assessees. However PAN number of both of them was given before CIT(A). There is also no denial of fact that the these two persons are regular buyers of scrap. Copies of their accounts in the books of the Assessee was also given. On identification of scrap and determination of price pucca receipt was given on 11.08.2009 and they are duly accounted for in the books of account as sale proceeds of scraps and the sale proceeds as shown has been accepted by the A.O. The other reasons stated by A.O. is that they were not produced. It was pointed out that the summons was issued to the Assessee on 06.07.2015 and asking the Assessee to produce them on 08.07.2015. As they were not available on that date they could not be produced and the A.O. on 10.07.2015 itself passed the assessment order and hence the Assessee had no proper opportunity to produce them. However the fact remains that they are I.T. assessees, they have confirmed having paid the amount stated in kachha receipt. Learned CIT(A) very briefly and cursorily observed that the Assessee explanation does not carry any merit. He merely repeated what the A.O. had said and confirmed the addition. 13. Before us the learned A.R. has referred to the detailed written submission filed before us and has reiterated the same in oral

15 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur submission. While the learned D.R. has relied on the orders of learned CIT(A) and the A.O. 14. We have gone through the orders of authorities below and have perused the material on record and have considered the submission of parties. We find that at the time of search itself the transaction of cash receipt from said two parties viz. Khatri Traders and Sai Ispat was duly explained. This was supported by kachha receipt issued by the cashier Shri Bhatt and the xerox copy thereof with confirmation of said parties was produced. There is no dispute that these two parties are Income Tax assessees. Merely not stating PAN number on the kachha receipt or on confirmation is of no avail when in fact those two persons are I.T. assessees and that their PAN number were produced before CIT(A). There is no dispute that these two persons are regular buyers of scrap from the Assessee. Transaction of sale when finalized are duly recorded in books and those sales are accepted by A.O. Giving of kachha receipt during pendency of determination of items of scrap and their value is merely a stop gap arrangement and there is no practice of maintaining carbon copy of such kachha receipt. Such kachha receipts loses it‟s value once the final receipt is issued on finalization of transaction. Thus merely because no carbon copy of said kachha receipt was not fond during

16 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur search cannot be a ground to dilute the efficacy of those receipts which are duly confirmed by the parties. Department cannot arbitarily and unreasonably reject the evidence and good explanation and then say that there is no evidence. Hon‟ble Supreme Court in the case of Sreelekha Banerjee and other Vs. Comm. of I.T. reported in (1963) 49 ITR P.112 (SC) has stated :- “Before the department rejects the evidence, it must show an inherent weakness in the explanation or rebut it by putting to the Assessee some information or evidence which it has in it‟s possession. The department cannot by merely rejecting unreasonably a good explanation and convert good proof into no proof.” 15. There was no material with the department that those two parties were not income tax assessees. On the other hand their PAN number were given before CIT(A) which proved that they were income tax assessees. Dept. has no material to allege that the confirmation given by them was in any way wrong. There is neither any proof or material with the dept. to disbelieve the transaction which was duly accounted by the Assessee and also by those two parties. 16. In view of the above referred facts and material on record we are of the considered view that the findings of A.O. and learned CIT(A) that the source of money amounting to Rs.8,60,000/- has remained unexplained is contrary to facts and material and evidence on record

17 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur and against the principles of law explained by Hon‟ble Supreme Court and Hon‟ble High Courts in this regard. In view of the above we delete the addition of Rs.8,60,000/- made by A.O. and confirmed by CIT(A) and allow the ground taken by Assessee as additional ground dt.21.12.2021. 17. Next ground is against the order of learned CIT(A) retaining the addition of Rs.10,43,150/- out of the total addition of Rs.44,08,422/- made by A.O. as excess or unexplained stock. Facts relating to the said ground is that the department during the search proceeding carried out stock staking and as per their working they found difference in stock of raw material at Rs.10,43,150/- and in stock of finished goods at Rs.33,65,272/-. When called upon to explain the difference in stock and reconcile the same Assessee filed a detailed reply explaining the same which is quoted by Assessing Officer in para 10 of his order. A.O. not being satisfied with the reply added Rs.44,08,422/- (alleged difference in raw material Rs.10,43,150/- and in finished goods Rs.33,65,272/-). Being aggrieved by the order of A.O. the Assessee filed an appeal before CIT(A)-3, Nagpur and gave a detailed written submission before CIT(A) on 25.10.2016 which is quoted by learned CIT(A) in para 18.2 (pages 68

18 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur to 72) of his consolidated order. In respect of addition in respect of stock of raw material the reply of Assessee was as under :- “Re. : Raw Material It may be noted at the outset that in respect of items of raw material and stores there is no difference in quantity of items and none is pointed out. The only difference alleged is in respect of value. It may be noted that there are huge quantities and varied items of various sizes, colour and quality. Thus the various items though look similar in the eyes of layman including huge staff of I.T. Department, they vary in various aspects resulting in variation in value of those items e.g. liping or thickness of the various types of Particle boards, Medium Density Fiber board, Laminated board panel, Membrane pressed panels differ slightly in millimeters and which apparently look alike but they differ greatly in value. Similarly on account of different foils, finishing and colour, price varies greatly though apparently they look alike. Similar in respect of hardware items like handles, hinges, locks, sliders chanels, though they look similar they differs in value. Thus in spite of huge stocks of raw material and stores of various items the Revenue has not found any difference in physical quantity of stock. The only difference that is alleged is in difference in value. It may be seen that in respect of some stock of raw material on plot No. N-6 the dept. has valued physical stock at lesser value than shown in books and in respect some stock of raw material in plot No.T-48 the dept. has valued physical stock at little higher value than as shown in books. There is thus neither any material or evidence even to allege any so called excess stock out of books. Thus the addition of Rs.10,43,150/- (included in addition of Rs.44,08,422/-) is wholly untenable and based on surmises and conjucture. Revenue has not found any defect in the books of account, stock account, so scientifically maintained; books of account have been accepted year after year. Opening stock at the beginning of the year as per books is accepted. Closing stock at the end of the year as per book is accepted. All purchases are supported by purchase bills and they are accepted. Similarly all sales are

19 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur supported by salebills and the sales as shown have been accepted. In view of these facts the addition of Rs.10,43,150/- on account of alleged difference in stock of raw material in the middle of the year and that too contrary to evidence and material on record and regulary maintained books of account supported by daily stock account is wholly untenable in law and on facts. There is no material with the department even to allege any investment outside the books in purchase of raw material and that too to the extent of Rs.10,43,150/-. For making addition u/s.69 burden squarely lies on the department. Revenue having no material or evidence, cannot make addition of Rs.10,43,150/- u/s.69 to the total income of the Assessee. The same needs to be deleted.” 18. Learned CIT(A) considered the said submission and gave his finding regarding raw material in para 18.3 of his order :- “18.3 I have considered the assessment order as well as the submissions of the Assessee on the remand report of the A.O. It is seen that in respect of raw material no major difference in number of items is pointed out. The only difference as stated by A.O. is in respect of value only. It was pointed out by the Assessee that there are huge quantities of various items of various sizes, colour and quality which may look alike to a layman but various items of particle board, fiber board, laminated board panel, membrane pressed panel may vary by a few millimeters in thickness which may all look alike but they vary greatly in value. Similar on account of different foils, finishing and colour, prices vary greatly but they took alike.

20 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur Similarly items of hardware like handles, hinges, locks, slider channel though look similar vary greatly in value. It is further seen that there is no variation in items or quantity. The only difference as per the A.O. in the assessment order in respect of raw material is mainly on account of valuation. It is seen and accepted position that there is no major difference in the items or quantity of raw material. The A.O. has accepted the opening stock of raw material and also closing stock of raw material at the end of the year. Purchase and sales are also accepted. The explanation of the Assessee is reasonable and acceptable and as rightly pointed out by Assessee mere difference in valuation in the middle of the year will have no impact on total income.”

21 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur

and held that the addition due to excess stock made by A.O. at Rs.44,08,422/- is restricted to the amount of Rs.10,43,150/-. Therefore the addition of Rs.10,43,150/- is confirmed. 21. This is plainly contradictory to his own finding regarding raw material stock given para 18.3 of his order which we have quoted above. We have gone through the order of A.O. wherein he has quoted the submission of Assessee as also the order of learned CIT(A) including the submission of Assessee filed before him which he has quoted in the order. We do not find any admission either directly or indirectly by the Assessee accepting the addition of Rs.10,43,150/- on account of difference in value of stock of raw material. On the other hand in his explanation before CIT(A) regarding raw material quoted above, the Assessee has emphatically stated the addition of Rs.10,43,150/- (included in addition of Rs.44,08,422/-) is wholly untenable and based on surmises and conjucture. Revenue has not found any defect in the books of account, stock book, so scientifically maintained and which have always been accepted by the Revenue. Even the so called difference alleged by Revenue is on account of value only and the difference in value in the middle of the year has no impact when the opening stock and closing stock shown by Assessee is accepted by the

22 ITA No. 06/Nag/ 2016 M/s. Spacewood Furnishers Pvt. Ltd. vs DCIT, Central Circle1(3), Nagpur Assessing Officer. In view of above we fail to understand how the learned CIT(A) has retained the addition of Rs.10,43,150/- which is contrary to his own findings. Having considered all the facts and circumstances of the case and the material on record we hereby delete the addition of Rs.10,43,150/- which was retained by learned CIT(A). Thus Ground No. 2 of the assessee and additional ground taken by the assessee are allowed. 22. In the result, the appeal of the assessee is partly allowed. Order pronounced in the Open Court on 28th April, 2022

Sd/- Sd/- (ARUN KHODPIA) (SANDEEP GOSAIN) Accountant Member Judicial Member Nagpur Dated:- 28/04/2022 *Mishra Copy of the order forwarded to: The Appellant- M/s. Spacewood Furnishers Pvt. Ltd. Nagpur 1. The Respondent- The DCIT, Central Circle 1(3), Nagpur 2. CIT 3. The CIT(A) 4. DR, ITAT, Nagpur 5. Guard File (ITA No. 100/Nag/2017) 6. By order, Sr. Private Secretary