JUDGMENT 1. By way of these appeals, the appellants have assailed the judgment and order of the tribunal whereby tribunal has partly allowed the appeal of the assessee reducing the GP rate from 15% to 12%. 2. In both these appeals common question of law and facts are involved hence they are decided by this common judgment. For convenience of the court, facts are taken from ITA No. 146/2018. 3. Counsel for the appellant has framed following substantial question of law:- Appeal No. 146/2018 (i) Whether the ld. ITAT was justified under law while confirming the enhanced addition of Rs. 14,14,80,498/- out of the enhanced addition made by ld. CIT(A) ignoring the explanation submitted by the Assessee appellant before the search team at the time of search on 20.5.2009 as well as explained before the ld. AO as well as before the authorities (ii) Whether the ld. ITAT was justified under law while sustaining the aforesaid enhanced addition made by ld. CIT(A) at Rs. 14,14,80,498/- on account of so called unaccounted stocks based on its suspicion and surmises and without having any evidence in support of the enhanced addition (iii) Whether the ld. ITAT was justified under law while sustaining the aforesaid addition of Rs. 14,14,80,498/- made by ld. CIT(A) by comparing the statement dated 30.4.2009 submitted by assessee-appellant to State Bank of Indore and the actual stock found while the books of accounts were rejected u/s 145(3) by the ld. AO and confirmed by the ld. CIT(A) as well as the ld. ITAT, Jaipur Appeal No. 148/2018 (i) Whether the ld. ITAT was justified under law while confirming the addition of Rs. 4,23,56,186/- made by ld. CIT(A) ignoring the explanation submitted by the assessee appellant before the search team at the time of search on 20.5.2009 as well as explained before the ld. CIT(A) (ii) Whether the ld. ITAT was justified under law while confirming the aforesaid addition made by ld. CIT(A) at Rs. 4,23,56,186/- on account of so called unaccounted stocks based on its suspicion and surmises and without having any evidence in support of the addition (iii) Whether the ld. ITAT was justified under law while confirming the addition made by ld. CIT(A) at Rs. ITAT was justified under law while confirming the aforesaid addition made by ld. CIT(A) at Rs. 4,23,56,186/- on account of so called unaccounted stocks based on its suspicion and surmises and without having any evidence in support of the addition (iii) Whether the ld. ITAT was justified under law while confirming the addition made by ld. CIT(A) at Rs. 4,23,56,186/- merely on the basis of its findings in the case of M/s. Clarity Gold who deals in business of Gold and not of cutting and polishing of raw material i.e. kharad and thus the business of the assessee company and M/s. Clarity Gold is not of similar nature 4. The facts of the case are that assessee company derives income from business of manufacturing of jewellery and trading of gem stones. A search and seizure operation u/s 132(1) of IT Act, 1961 was carried out on 20.5.2009 at the business and residence premises of the assessee group. The background of search action on the Clarity group was survey u/s 133(A) conducted in FY 2007-08 by BCTT wing of Investigation Directorate at Jaipur which revealed that the assessee company and its sister concern had obtained bogus purchase bills from various entry providers who provided bogus sales bills without supplying the goods mentioned in the bills. 5. Counsel for the appellant has taken us to the order of AO where bogus purchase bill for financial year 2004-05, 2005-06, 2006-07 & 2007-08 of M/s. Clarity Gold Pvt. Ltd. has been detailed which reads as under:- A. M/s. Clarity Gold Pvt. Ltd. F.Y. 2004-05 S.No. Name & Concern from which bogus purchase bill obtained Group Amount 1. M/s. Unique Jewellery Palace Vijay 581135 F.Y. 2005-06 S.No. Name & Concern from which bogus purchase bill obtained Group Amount 1. M/s. Vijay Gems Vijay 438491 2. M/s. R.H. Jewellers Vijay 1965134 3. M/s. Unique Jewellery Palace Vijay 2758615 4. M/s. Ridhi Sidhi Gems & Jewels Vijay 2094056 5. M/s. Jodhpur Gems Lalwani 2254825 6. M/s Vaishali Gems Lalwani 1743768 7. M/s Anil Exports Lalwani 919425 8. M/s. Mahaveer Gem & Jewels Lalwani 2076050 Total 14250364 F.Y. 2006-07 S.N. Name & Concern from which bogus purchase bill obtained Group Amount 1. M/s. Anshu Gems Vijay 7750984 2. M/s. Vijay Gems Vijay 7379967 3. M/s R.H. Jewellers Vijay 11947561 4. M/s. Unique Jewellery Palace Vijay 7874702 5. M/s. Ridhi SidhiGems & Jewels Vijay 8361659 6. M/s. Mahaveer Gem & Jewels Lalwani 2076050 Total 14250364 F.Y. 2006-07 S.N. Name & Concern from which bogus purchase bill obtained Group Amount 1. M/s. Anshu Gems Vijay 7750984 2. M/s. Vijay Gems Vijay 7379967 3. M/s R.H. Jewellers Vijay 11947561 4. M/s. Unique Jewellery Palace Vijay 7874702 5. M/s. Ridhi SidhiGems & Jewels Vijay 8361659 6. M/s. Saloni Exports Vijay 5712692 7. M/s. Subh Laxmi Gems Vijay 6175128 8. M/s. Jodhpur Gems Lalwani 7908345 9. M/s. Vaishali Gems Lalwani 5390000 10. M/s. Anil Exports Lalwani 1700000 11. M/s. Mahaveer Gems & Jewels Lalwani 1520000 12. Total 71721038 F.Y. 2007-08 S.N. Name & Concern from which bogus purchase bill obtained Group Amount 1. M/s Anshu Gems Vijay 5619040 2. M/s. Vijay Gems Vijay 3426257 3. M/s. R.H. Jewellers Vijay 3706216 4. M/s. Unique Jewellery Palace Vijay 1891587 5. M/s. Ridhi Sidhi Gems & Jewels Vijay 386623 6. M/s. Saloni Exports Vijay 3081796 7. M/s. Subh Laxmi Gems Vijay 2621980 8. M/s. Vaishali Gems Lalwani 648280 Total 21381779 6. He also taken us to the finding recorded by AO which reads as under:- 10. Answering Q.No.15, Sh. Khushi Kumar Ameriya also stated that 95% of the turnover of the Gems Unit was also bogus and the turnover was being enhanced for the purpose of obtaining higher bank finance. The bank finances upto 75% of the stock value as well as 75% of 90 days debtors. In this manner, the stock in trade of the concern has also been inflated. Sh. Khushi Kumar Ameriya also admitted this modus operandi in the statements recorded at his residence while confronted with the documents seized from his residence. The bank finances upto 75% of the stock value as well as 75% of 90 days debtors. In this manner, the stock in trade of the concern has also been inflated. Sh. Khushi Kumar Ameriya also admitted this modus operandi in the statements recorded at his residence while confronted with the documents seized from his residence. Relevant part of his statement is reproduced below:- Á'u 15 vkius crk;k fd CkksXl fcy ds ek/;e ls vkidh QeksZ dk Vªuvksoj ,oa LVkWd bu VªsM nksuksa buQSYV fd;k gSA ;g vki fdl Ádkj djrs gS] d`i;k foLrkj ls le>k;saA mRrj Vªuvksoj c<+kus ds fy, ijspl ds CkksXl fcy ysrs gS ftldh isesaV pSd }kjk dh tkrh gS] blh Ádkj lsy ds Hkh CkksXl fcy ysrs gSA ftldh isesaV Hkh psd }kjk ÁkIr gksrh gS ,d gh ,tsUV lsYl ,oa ijpsl nksuksa vjsat djrk gSA bl Ádkj ls tSe ;wfuV dh ,QŒokbZŒ 2008&09 dh tks geus 83&84 djksM+ dh Vªuvksoj viuh iqLrd esa fn[kkbZ gS ftlesa rdjhcu 95 Áfr'kr lsYl CkksXl gSA eSa vkidks gekjh dEiuh dh fofHkUu ;wfuV dh fte ,oa CkksXl lsYl dh Áfr'kr crk jgk gaw tks fd fuEu Ádkj ls gSA ¼1½ tSoyjh ;wfuV & lhrkiqjk bl ;wfuV esa 100 Áfr'kr vlyh lsy gSA ¼2½ futkeh ;wfuV & bl ;wfuV esa Hkh 100 Áfr'kr vlyh lsy gSA ¼3½ tse ;wfuV & bl ;wfuV esa yxHkx 95 Áfr'kr lsYl CkksXl gSA ¼4½ flYoj LVkj & bl ;wfuV dh lsYl ds ckjs esa eq>s dksbZ tkudkjh ugha gS rFkk blds fo"k; esa vkidks iw.kZ tkudkjh Jh egs'k [k.Msyoky ,oa Jh iou [k.Msyoky ns ldrs gSA ¼5½ eqEcbZ lsYl vkWfQl & bl ;wfuV esa Hkh 100 Áfr'kr vlyh lsYl gSA Á'u 16 tSlk fd vkids }kjk iwNs x;s Á'uksa ds mRrj esa crk;k x;k gS fd vkidh dEiuh Vªuvksoj c<+kus ds fy, CkksXl ijpsl ,oa CkksXl lsYl fn[kkrh gS rFkk vki ;g dk;Z nyky ds ek/;e ls djrs gSA d`i;k crk,a fd vkidh dEiuh us bl Ádkj ds CkksXl ijpsl ,oa lsYl ,oa dk;Z fdu&fdu nykyksa ds ek/;e ls fd;k gS] budks fdruk deh'ku fn;k gS \ mRrj %& bl fo"k; esa eSa ;g crkuk pkgrk gaw fd geus fuEufyf[kr nykyksa ds ek/;e ls CkksXl ijpsl ,oa lsYl dk dk;Z gS %& 1- Jh vuqi dkykuh] fuŒ & t;iqj 2- Jh jke 'kekZ] fuŒ & t;iqj 3- Jh ';ke 'kekZ] fuŒ & t;iqj 4- Jh lqHkk"k tSu] fuŒ & t;iqj 5- Jh xksiky ef.k;kj] fuŒ & t;iqj 6- Jh ikjl tSu] fuŒ & eqEcbZ 7- Jh vfuy yyokuh] fuŒ & t;iqj Á'u 19 d`i;k crk;sa fd vkidh dEiuh ds Åij of.kZr cksXl ijpsl ,oa lsYl bR;kfn dk;ksZ dks djus dk fu.kZ; fdlds }kjk fd;k x;k \ mRrj % ;g lHkh fu.kZ; gekjh dEiuh ds ps;jesu & eSusftax Mk;jsDVj Jh f'ko'kadj xqIrk dk gS rFkk mUgha ds dgus ij ;g lHkh dk;Z fd;s x;s gSA Á'u 20 d`i;k crk;s fd vkidh dEiuh dh lHkh ;wfuV@LVsV vkWfQlj ds ,QŒvkbZŒ 2008&09 dh dqy lsYl fdruh gS ftlesa ls vlyh ,oa cksXl lsYl fdruh gSA mRrj % gekjh mijksDr dEiuh dh ,QŒvkbZŒ 2008&09 dh dqy lsYl yxHkx 107 djksM+ gS ftles ls yxHkx :i;s 25 djksM+ dh vlyh lsYl gS rFkk ckdh yxHkx :i;s 82 djksM+ dh cksXl lsYl gS tks fd okLro esa gqbZ gh ugha gS rFkk dsoy Vªuvksoj c<kus ds fy, fn[kkbZ xbZ gSA Á'u 21 d`i;k crk;sa fd vkidh dEiuh esa cksXl ijpsl ,oa lsYl dk dk;Z fdl Ádkj fd;k tkrk gS] vFkkZr dgka ij o dSls nyky ls eqykdkr gksrh gS] dkSu ;g ckr@eqykdkr djrk gS d`i;k foLrkj ls lkjh ÁfØ;k crk;saA mRrj % bl fo"k; esa ;g eSa ;g crkuk pkgrk gaw fd dqN rks gekjs fu;fer nyky gS tSls fd Jh lqHkk"k tSu t;iqj] Jh ikjl tSu eqEcbZ vkSj Jh vuqi dkykuh t;iqj ftuls dh jsXkwyj csfll ij gekjh dEiuh dks cksXl ijpsl ,oa lsy ds fcy ÁkIr gksrs jgrs gSA blds vykok tc dHkh vf/kd cksXl ijpsl ;k lsy ds fcy dh t:jr gksrh gS rks esa nykyksa dks gekjh dEiuh ds jhfxy vkWfQl&4] ljnkj iVsy ekxZ] lh&Ldhe] t;iqj ij cqykrk gaw ,oa gekjh dEiuh ds lhŒ,eŒMhŒ Jh f'ko 'kadj xqIrk ls fMLdl ,oa ,ijsowy ysdj ml nyky dks cksXl ijpsl ,oa lsy fcy ,jsat djus dh ekSf[kd funsZ'k nsrk gaw ftlds ckn og nyky gekjh dEiuh ds fy, bl Ádkj ds fcy ns nsrk gSA bl Ádkj ds nyky dks gekjs }kjk 0-25 Áfr'kr ls ysdj 0-65 Áfr'kr rd deh'ku nsuk r; gksrk gSA 18. In post search proceedings a detailed query letter was issued on 16.7.2009 for explaining the issues of bogus purchases in view of statements of Sh. K.K. Ameriya, bogus sales, discrepancies in silver star unit and submissions of silver star persons but assessee did not respond and opted not to comply the terms of the letter. The basic facts found during the search therefore remained uncontroversial. 19. During the course of present proceedings the assessee company was given required to explain its case on the various finding of search action and evidence gathered. Vide notice u/s 142(1) of the IT Act, specifically the assessee was required to explain its case on the submissions made by the key persons u/s 132(4) dealing with the business of the assessee and it was also required to produce the concerned parties from whom bogus sales and purchase are made. Assessee was allowed more than sufficient opportunities vide order sheet entries dated 11.7.2011, 18.7.2011, 21.7.2011, 28.7.2011, 29.7.2011, 2.8.2011, 8.8.2011, 9.8.2011, 11.8.2011, 16.8.2011 and 17.8.2011 but most of the times the reply of A/R remained that relevant explanation/information’s would be submitted on next hearings. However, on 5.8.2011 the A/R of the assessee filed reply submitting that:- 2. With regards to difference in valuation of stock found at the time of search; we wish to reiterate as was submitted before the ADIT, Jaipur-II; that the valuation was got done by Income tax department personnel's which has no credence and sanctity in the eyes of law. 2.1 The said valuation as has got done by the office of the income tax Department is unauthorized, illegal, irrelevant, contrary to the provisions of section 133A of the income tax Act and has been prepared as per own convenience and thus deserves to be ignored being void ab initio. 2.2 The departmental valuers were allowed access to business premises of the assessee without subjecting themselves to verification at the time of entry and at the same time there were not subject to frisking at the time when they have left the business premises. 2.3 We would like to know on what basis the valuation exercise has been done by these valuers. Prima facie it appears that these valuers have inserted the stock values as per their convenience. 2.3 We would like to know on what basis the valuation exercise has been done by these valuers. Prima facie it appears that these valuers have inserted the stock values as per their convenience. The valuation so made by them is biased, faulty and before you rely on any of these figures we would request you to provide us an opportunity to cross examine each one of them. 2.4 As submitted earlier, the assessee company is dealing in more than 100 types of precious, semi precious stones, gold ornaments and metals and within each category of stones there are more than 500 types of qualities that are to be looked into. There are thousands of packets of stones (stones kept in packets). These valuers have without adhering to the norms of valuation, have mixed the lots of stones and valued the stones. Each category of stone may have valuation ranging from Rs. 1 per cent to more than Rs. 1.00 lacs per carat. This has also caused our business an irreparable loss as we are at loss to reclassify the stones as they were kept in the lots originally. 2.5 It is also surprising to note that the valuers have managed to value over 14 tonnes of various Raw materials kept in 89 bags in a short span of few hours, whereas it would take several man days just to open them and keep them for weighment. The volume of finished goods (cut stones) was equally huge and one cannot possibly weigh even in a few hours when packets were to be opened, seen, weighed in weighment machine and again put back in packets, etc. 2.6 It is clear that the total exercise undertaken by the paid personnel's of the department is as per dictated terms and in convenience and is a total farce and deserves to be ignored. 3. With regards to the alleged statements of Sh. Khushi Kumar Ameriya, we wish to reiterate as was submitted before the ADIT, Jaipur-II; that we have been provided computerized copies of the statement recorded of Sh. Khushi Kumar Ameriya. It is requested to province complete hand written certified copy of the statements recorded of Sh. Khushi Kumar Ameriya instead of a typed copy. The papers given by you do not even bear signatures of Sh. Khushi Kumar Ameriya-it also no evidentiary value. Khushi Kumar Ameriya. It is requested to province complete hand written certified copy of the statements recorded of Sh. Khushi Kumar Ameriya instead of a typed copy. The papers given by you do not even bear signatures of Sh. Khushi Kumar Ameriya-it also no evidentiary value. 3.1 It is also submitted that the alleged statements of Sh. Khushi Kumar Ameriya were recorded under duress; he was pressured to sign on the dotted lines. The statements were recorded beyond the powers granted as per provisions of section 132 and section 133A. The statements were recorded when Sh. Khushi Kumar Ameriya was not in a proper physical and mental state of mind. The statements so recorded have no sanctity in the eyes of law and is illegal and deserves to be ignored. Copy of affidavit duly notarized by Sh. Khushi Kumar Amerioya on 19.6.2009 and submitted before the District Magistrate and copy of which is already with the income tax department is enclosed herewith which will clarify our submission. 3.2 Before you rely upon the alleged illegal statements of Sh. Khushi Kumar Ameriya; we should be allowed an opportunity to cross examine, Sh. Kushi Kumar Ameriya. Placing reliance on such illegal statements would be in illegality. 3.3 All transactions of purchase and sale have been declared in the books of accounts. Due taxes on the income is being declared from year to year. Nothing is there which is outside the books of accounts. 4. With reference to your observation with regards to submission of trading account for bogus transactions and real and genuine transactions we wish to reiterate as was submitted before the ADIT, Jaipur II; that you are kindly requested to first clarify to us as to what is meant by the term Bogus Bills, according to use a bill is a bill. 4.1 A business man during the course of his business purchase the goods locally or from foreign parties mainly on credit. All such parties are income tax assessee (PAN is allotted by the income tax Department) and Sales tax assessee (TIN is allotted by the Sales tax Department). As a businessman we are supposed to know the products we are buying, the terms for which the goods are sold and also do a reasonable check on the parties who are supplying the products. As a businessman we are supposed to know the products we are buying, the terms for which the goods are sold and also do a reasonable check on the parties who are supplying the products. Our checks are based on PAN issued by the income tax department and TIN issued by the Sales tax Department. We do not have the infrastructure nor have the power to investigate the parties who are supplying us the goods. What else are we supposed to gather from the parties That is not the intention of the income tax Act and if that were the case then how one will conduct the business If you as an official of the income tax Department do not own upto the parties to whom you have issued PAN then it is not the fault of the businessmen. Entire issue of bogus bill being raised by you time and again as instilled fear in the minds of the businessmen and in turn it is leading to collapse of the trade in city of Jaipur. 4.2 Even the banker has to be satisfied when one opens a bank account, identity is obtained, complete particulars are obtained, all payments are by account payee cheques and this fact can be verified from both the banks by you. 4.3 The goods and the bills are procured from the registered sellers. All the goods purchased have been entered in the stock register maintained by the company. Entire payment towards the purchase of such goods have been made by way of an account payee cheque issued by the assessee to the concerned purchasers. The gods are subsequently sold as it is in the same shape, size and weight or after mixing it with other lots. Entire goods that are sold subsequent to purchase are supported by the sales bills issued to the customer and gods so sold are entered in the stock register maintained by the assessee appellant. Payments towards such sales have come from through proper banking channel in the account of the assessee. Profits from such sale have been duly disclosed in the books of accounts. All provisions of Sale of Goods Act have been accomplished in these transactions. 5. With regards to the alleged statement of Sh. Raghu Dutt Tiwari; accountant at Silver Star, we wish to submit that we have been provided computerized copies of the statements goods of Sh. Profits from such sale have been duly disclosed in the books of accounts. All provisions of Sale of Goods Act have been accomplished in these transactions. 5. With regards to the alleged statement of Sh. Raghu Dutt Tiwari; accountant at Silver Star, we wish to submit that we have been provided computerized copies of the statements goods of Sh. Raghu Dutt Tiwari. It is requested to provide complete hand written certified copy of the statements recorded of Sh. Raghu Dutt Tiwari instead of a typed copy. The papers given by you do not even bear signatures of Sh. Raghu Dutt Tiwari-it has no evidentiary value. 5.1 It is also submitted that the statements of Sh. Raghu Dutt Tiwari were recorded under duress; he was pressured to sign on the dotted lines. He was subjected to physical harm by the officers of the department. The statements were recorded beyond the powers granted as per provisions of section 132 and section 133A. The statements so recorded have no sanctity in the eyes of law and is illegal and deserves to be ignored. Copy of affidavit duly notarized by Sh. Raghu Dutt Tiwari on 19.6.2009 and submitted before the District Magistrate and copy of which is already with the income tax Department is enclosed herewith which will clarify our submission." 19.1 Vide letter dt. 9.8.2011, the A/R further submitted his arguments as under:- Without prejudice to what has been submitted earlier and without admitting what has been stated earlier with reference to the purchase made by the assessee as well as sales made by the assessee over the years, we further submit that the employees or/and other persons clearly have stated in their statements that purchases or/and sales in the following units are genuine, fool proof, verifiable and not tainted: Jewellery Unit. Nizami Unit. Mumbai Division Thus, as far as these units are concerned they have to be treated to have been properly accounted for are genuine, not tainted, are fool proof and all purchases/sales in these units deserve to be accepted as such and no addition is required to be made as far as these units are concerned. Nizami Unit. Mumbai Division Thus, as far as these units are concerned they have to be treated to have been properly accounted for are genuine, not tainted, are fool proof and all purchases/sales in these units deserve to be accepted as such and no addition is required to be made as far as these units are concerned. For other units also, we have already explained that no addition is required to be made as all sales are vouched, detailed, verifiable and mainly on credit and all purchases so made have been made by A/c Payee Cheques and all payments relating to sales have been received by the assessee by A/c Payee Cheuqes. Further verification can be made from the income tax Assessments, Sales Tax Assessment and from Banks directly. In view of the above facts and circumstances and earlier letters, no addition is required to be made treating the purchases or/and sales as bogus/tainted in all the units. Further if you so rely on the statement of Sh. K.K. Ameriya, Sh. Raghu Dutt Tiwari or/and other persons then certainly the assessee has a right to cross examine these persons as they have stated wrongly under coercsion, under pressure and threatening given by the various officers during the course of the search. The statements were recorded when these persons were not in a proper physical and mental state of mind. These are self statements and unless right to cross examine is permitted, they cannot be relied upon by any stretch of imagination. They may state all along wrong things but that wrong things cannot be made good unless they so at the time of cross examination. It is settled opposition of law by various judgments of the Hon'ble Supreme Court of India which is the Law of the land that addition cannot be made merely saying so by one person against another unless in cross examination also one says the same thing or otherwise. One has to weight in what circumstances statements were given. When all the purchases are by proper bills from income tax assessees, Sales tax assesses, payments are by A/c Payee Cheques, when sales are too by proper bills to income tax assessees, Sales tax assessees and payments are by A/c Payee Cheques, there was no occasion for Sh. K.K. Ameriya, Sh. When all the purchases are by proper bills from income tax assessees, Sales tax assesses, payments are by A/c Payee Cheques, when sales are too by proper bills to income tax assessees, Sales tax assessees and payments are by A/c Payee Cheques, there was no occasion for Sh. K.K. Ameriya, Sh. Raghu Dutt Tiwari or/and other persons to say that the sales/purchases are bogus, not genuine, not tainted. On the face of these overwhelming evidence none would say to be bogus or tainted or non genuine unless one is threatened of dire consequences or on coercion, pressurizing tactics or otherwise. We have already submitted that the same Sh. K.K. Ameriya immediately after the search gave an affidavit voluntarily duly notarized which was submitted before the Judicial Authorities that he had and his family members were threatened, he and other employees were manhandled and that whatever has been stated in the so called statements were not given by him, were written by the authorized officers on their own and without reading or writing he was asked to sign on the dotted lines at odd hours in the late night. Similar has been the Affidavit of Sh. Raghu Dutt Tiwari also. We have already placed on record the Affidavits of both these persons alongwith our letter of August 5, 2011. We strongly rely on these. On the face of it, these are after the alleged statements if any and therefore whatever has been stated on oath by them has to be accepted rather than what they had stated earlier under threat, coercion or pressurizing tactics. It is in the light of these facts that we again request you to provide right to cross examine of the persons who say otherwise/adversely other than, what is apparent on record. One may be a Director or an employee but if coercive measures are used one may not withstand atrocities committed by the officers & can write whatever one wishes & sign on the dotted lines. It is on record that pressurizing tacks were used employees were manhandled, were not permitted to eat properly, meet family members, sleep properly and threatened. We again submit that it is merely a bold statement by them and deserves to be ignored or it has no evidentiary value. 25. It is on record that pressurizing tacks were used employees were manhandled, were not permitted to eat properly, meet family members, sleep properly and threatened. We again submit that it is merely a bold statement by them and deserves to be ignored or it has no evidentiary value. 25. Since books of accounts were not complete on the date of search exact stock as per books on the date of search could not be worked out neither in terms of value nor quantitatively. However, it was seen that the assessee furnished details of stock statement as on 30.4.2009 to State Bank Indore. This stock statement was obtained and it was found that on 30.4.2009 the company was having stock of Rs. 295567819. Thus as on 30.4.2009 the book stock was of Rs. 29.55 crores. Taking this stock in to consideration there was a deficiency of stock of more than Rs. 75.03 crores as one the date of search. The difference in stock has not been explained by the assessee. In post search proceedings the assessee was specifically asked vide letter dt. 16.7.2009 to reconcile the difference in stock found and submitted to bankers but it has totally failed to reconcile the same. Even in the present asstt. Proceedings and it has not bear satisfactorily explained. A very general and vague reply has been filed by the A/R vide letter dt. 5.8.2011. Contentions raised in para 12 of letter dt. 5.8.2011 reproduced above are not tenable as the valuation was done by the experts, in the presence of assessee's employees dealing/managing the affairs on the date of search/seizure, no objection of any nature were raised by the employees at the time of search or just after the search. Now challenging the valuation on frivolous grounds is only an after though and just too devoid the investigation. Even the assessee has not been able to produce correct quantification and valuation after search, if it was of the view that valuation made by the search party was faulty or incorrect. Now challenging the valuation on frivolous grounds is only an after though and just too devoid the investigation. Even the assessee has not been able to produce correct quantification and valuation after search, if it was of the view that valuation made by the search party was faulty or incorrect. It may further be seen that assessee itself admits that there is vast different in rate of items of one category and under such circumstances if assessee itself was not possible to quantify and value the goods, the figures of stock and sale/purchases in trading accounts are admittedly not subject to proper verification deficient stock found clearly proves that either fake purchase bills are introduced so as to increase the stock or the sales are reduced. The submission of Sh. K.K. Ameriya again comes in to the picture that stock statements are inflated by way of showing bogus purchases, debtors and turnover. This fact is conclusively proof of incorrectness of books of accounts and trading results of the company. 7. Thereafter, the CIT(A) has reproduced the finding recorded by the AO which we have already discussed. 8. He also taken us to the submissions made by the appellant before the CIT(A) in para no.5.2 which reads as under:- 5.2 The AR of the appellant has contended as under:- The additions made by the Learned Assessing officer in the trading account are assailed as under 1. Business of the assessee- The assessee is a company and engaged in the business of manufacturing and trading of gem stones. The company has separate main four units working at different locations in Jaipur besides other branches at Mumbai and other places in various parts of India. Separate books of accounts are maintained for these units. The four units working at Jaipur are named as Gem Unit, Silver Star Unit, Jewellery Division and Nazami Division. Complete books of accounts have been maintained during the course of business. The assessee is maintaining all the books of accounts including cash book, bank books journal book, Ledger bills & voucher 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 u/s 44AB of the Income Tax Act, 1961 and audit report was submitted along with the return of income. The books of accounts are maintained on mercantile system of accounting. The books of accounts are audited u/s 44AB of the Income Tax Act, 1961 and audit report was submitted along with the return of income. The auditors have not made any adverse remarks regarding the maintenance of the books of accounts. During the course of assessment proceedings all these books was pointed out. In view of this the Learned Assessing Officer was not justified in rejecting the books accounts. 2. BCTT survey results not provided to the assessee In the assessment order the Learned Assessing Officer has referred to surveys conducted by BCTT wing of the department in Financial Year 2007-08 it is mentioned in the assessment order that during the course of surveys it was gathered that assessee was obtaining bogus bills and Vijay Group and Lalwani Group. Before completing assessment the Assessing Officer has not provided either the results of surveys or the statement of Shri Anil Kumar Lalwani and Others so that assessee could furnish his defense. Hence when the material used by the Assessing Officer was not provided to be assessee, the assessment proceedings become bad in law. 3. In turnover of bogus purchase and sales the margin is Nil- In the entire assessment order the main thrust of the Learned Assessing officer is on the issue of bogus voucher of purchase and sale. In this regard statements of Shri K.K. Ameria, Shri Raghu Dutt Tiwari and Shri Pawan Kumar Khandelwal have been quoted at length. The assessee has already challenged the veraity of these statements in as much as these were recorded under threat and duress. In any case the gist of the statements is that bills of purchases (bogus) were obtained after making payment of commission from 65 paise to rupee 1. (Page 22 of the assessment order where statement of Shri Raghu Dutt Tiwari is reproduced). Similarly the assessee also got a similar COMMISSION on issuring such bogus sale bills. In other words the assessee was not earning anything in the process of obtaining bogus purchase vouchers and issuing sale vouchers. The only benefit which the assessee derived was banking credit facility on the basis of increase turnover. This finds support from the statement of Shri K.K. Ameria relied upon by the Learned Assessing Officer. This is quoted in para 7 on page 2 of the assessment order. The only benefit which the assessee derived was banking credit facility on the basis of increase turnover. This finds support from the statement of Shri K.K. Ameria relied upon by the Learned Assessing Officer. This is quoted in para 7 on page 2 of the assessment order. The assessee could increase his turnover in the process of alleged bogus purchase vouchers and bogus sale vouchers. Therefore the entire exercise of the Learned Assessing Officer which suggests that assessee earned in the aforesaid process of bogus vouchers. The Learned Assessing Officer has not conducted any post search inquiries which may also support the finding of the Learned Assessing Officer of earning higher profits by the assessee by way of obtaining bogus purchase vouchers and issuing bogus sale vouchers. Thus there was no justification of the Learned Assessing Officer for taking u/s 153 in the case and subsequently completing the assessment by making addition of Rs. 1,02,92,954/-. 4. Sunjay Oil Case Industries vs. CIT 10 DTR 153 (Guj.) case is not applicable The Learned Assessing Officer has referred the aforesaid case law on page no.36 of the assessment order. It is submitted that the ratio of this case has not been found applicable in the case of the assessee in Assessment Year 2006-07 wherein addition was made by disallowing 25% of the bogus purchases to the tune of Rs. 5.40 crores. In the first appeal itself the Learned CIT(A) directed for applying GP rate of 8.5% as against 7.40% disclosed by the assesse. It is further submitted that as mentioned by the Learned Assessing Officer in the assessment order on page no.36 that in Assessment Year 2005-06 the issue of bogus purchases cropped up and the Learned Assessing Officer has applied GP rate of 13.2% as against GP rate of 12.72% disclosed by the assessee. This GP rate was subsequently reduced by the Learned CIT(A) to 13%. The Hon'ble ITAT later on sustained addition only of Rs. 1,00,000/- against a turnover of Rs. 14,26,09,000/- meaning thereby the GP rate was increased only 0.07%. In other words as against GP rate disclosed 12.72% GP rate applied was 12.79%. In view of the above facts the GP rate for the Assessment Year 2005-06 virtually stood accepted by the Hon'ble ITAT despite rejection of books of accounts. In these circumstances no addition was warranted during the year under consideration also. 5. In other words as against GP rate disclosed 12.72% GP rate applied was 12.79%. In view of the above facts the GP rate for the Assessment Year 2005-06 virtually stood accepted by the Hon'ble ITAT despite rejection of books of accounts. In these circumstances no addition was warranted during the year under consideration also. 5. History of the case is the best guidance As discussed in the forgoing para in the Assessment Year 2005-06 the Hon'ble ITAT has accepted the GP rate of 12.79% in the case of the assessee as against disclosed GP rate of 12.72%. This means that despite rejection of accounts on the ground of bogus purchase bills only an addition of Rs. 1 Lac was sustained. The facts and circumstances of the case, the nature of business is same in the year under consideration and is identical to Assessment Year 2005-06. The GP rate is higher being 16.08%. Hence there was absolutely no justification for making any addition. Further the Learned CIT(A) has also accepted the GP rate of 8.5% in Assessment Year 2006-07 in the same set of circumstances. Considering these facts which constitute the history of the case no addition is called for in the year under consideration. 6. No basis of application of GP rate of 17%- It is further submitted the entire facts for the Assessment Year 2005-06 and 2006-07 have been discussed by the Learned Assessing Officer in the body of the assessment order on page 36. In these assessment Year the GP rate accepted by the department is 12.79% in Assessment Year 2005-06 and 8.5% in Assessment Year 2006-07. Despite all this the Learned Assessing Officer has applied GP rate of 17% without bringing any additional material on record. No comparable case has been cited. In view of this the trading addition made by the Learned Assessing Officer deserves to be knocked down. The following table reflects the trading results of the assessee in Assessment Year 2006-07 to 2010-11. A.Y. Turnover Gross Profit G.P. Rate Remarks 2006-07 546642847 40452067 7.40% 8.5% applied by the Learned CIT(A) 2007-08 687479941 58148440 8.45% 2008-09 977758373 94661850 9.68% 2009-10 1030627271 140129208 13.59% 2010-11 154038479 15893587 10.31% The perusal of the aforesaid table reveals that the result shown in Assessment Year 2010-11 is better in comparison to earlier years. The GP rate disclosed is better in comparison to that upheld by the ld. The GP rate disclosed is better in comparison to that upheld by the ld. CIT(A) in A.Y. 2006-07 of 8.5%. No addition is Decision of ITAT in assesses's own case in assessment year 2005-06 to 200-10. The Hon'ble ITAT in ITA No.245/JP/2013 to 249/JP/2013 has deleted the entire addition made under the similar facts and circumstances therefore the issue of the appeal is squarly covered in favour of the assessee. 9. He contended that tribunal has committed serious error in not appreciating the argument advanced by the appellant in para no.5.5 before the CIT(A) which reads as under:- 5.5 The appellant was again given a show cause u/s 251(2) of the IT Act, 1961 as to why not the income be enhanced by applying a GP rate of 15% (as upheld by Hon'ble ITAT in the recent cases) on stock deficiency of Rs. 15,03,42,985 after treating the same as unaccounted sales. 10. Counsel for the appellant has taken us to the observations made by the tribunal which according to the appellant are contrary to law. 11. He also taken us to the paper book where complaints have been lodged on 22.6.2009 & 26.6.2009. Again, he has also taken us to the different correspondence entered either by him or counsel for the assessee dt. 25.5.09, again by one of the Director dt. 25.5.2009 and One Sh. Shiv Shanker Gupta on 25.5.2009, by counsel on 26.5.2009 and two letters dt. 27.5.2009, thereafter, by Director of Clarity Gold dt.3.6.2009, another letter of Sh. Shiv Shanker Lal Gupta dt. 3.6.2009. He contended that again compliant was lodged on 12.12.2013 and has also produced affidavit of different Directors namely Kushi Kumar, Raghudutt Tiwari, Roshan Meena, Pawan Khandelwal & Pankaj Khandelwal. 12. Taking into consideration, he contended that the tribunal has committed serious error in dismissing the appeal of the assessee. He further contended that the notice issued u/s 251 was replied by the assessee despite, the same was not considered by tribunal. 13. Counsel for the appellant has relied upon the decision of Gujarat High Court in Commissioner of Income Tax vs. President Industries, 2002 258 ITR 654 wherein it has been held as under:- 2. The Assessing Officer made the addition of the entire sum of the said undisclosed sales as income of the assessee for the asst. yr. 1994-95. 13. Counsel for the appellant has relied upon the decision of Gujarat High Court in Commissioner of Income Tax vs. President Industries, 2002 258 ITR 654 wherein it has been held as under:- 2. The Assessing Officer made the addition of the entire sum of the said undisclosed sales as income of the assessee for the asst. yr. 1994-95. The additions on account of undisclosed sales was affirmed by the CIT(A) to the reduced sum of Rs. 28,35,883. On further appeal the Tribunal found that the entire sale could not have been added as income of the assessee for the assessment year in question but only to the extent the estimated profits embedded in the sales for which the net profit rate was adopted entailing addition of income on the suppressed amount of sales. The Tribunal also found that there is no material on the record to suggest that the assessee made any investment outside books of accounts to make alleged unaccounted sales in respect of the aforesaid appellate order. The applicant made an application under s. 256(1) for referring the aforesaid two questions said to be arising out of Tribunal's order. 3. Having perused the assessment order made by the AO, the order made by the CIT(A) and the Tribunal, we are satisfied that the Tribunal was justified in rejecting the application under s. 256(1). It cannot be a matter of an argument that the amount of sales by itself cannot represent the income of the assessee who has not disclosed the sales. The sales only represented the price received by the seller of the goods for the acquisition of which it has already incurred the cost. It is the realisation of excess over the cost incurred that only forms part of the profit included in the consideration of sales. Therefore, unless there is a finding to the effect that investment by way of incurring cost in acquiring goods which have been sold have been made by the assessee and that has also not been disclosed. In the absence of such finding of fact the question whether entire sum of undisclosed sale proceeds can be treated income of the relevant assessment year answers by itself in negative. In the absence of such finding of fact the question whether entire sum of undisclosed sale proceeds can be treated income of the relevant assessment year answers by itself in negative. The record goes to show that there is no finding nor any material has been referred about the suppression of investment in acquiring the goods which have been found subject of undisclosed sales. 4. We are, therefore, of the opinion that no question of law which requires to be referred to this Court arise out of Tribunal's appellate order. The order of Tribunal under s. 256(1) is not erroneous in reaching such conclusion. 13.1 Another decision of Rajasthan High Court in Commissioner of Income Tax vs. Laxmi Engineering Industries, (2009) 308 ITR 279 wherein it has been observed as under:- After a review of all the judgments cited at the bar, we are of the view, that of course, in Coimbatore Spinning & Weaving Co.'s case it has been observed, that the alleged practice showing inflated figure to the bank is not recognised in commercial circles or by court, and the Tribunal is not expected to take judicial notice of such substandard morality, but then, the plethora of judgments cited on the side of the assessee, do clearly show, that there can be circumstances, where there may be difference in the quantity of stock, as appearing in the balance sheet, and as appearing in the hypothecation made to the bank, and that if there is any explanation coming forward for the discrepancy, then the addition need not be made, and that, sufficiency or reliability of the explanation, offered by the assessee, is a question of fact, and the findings thereon, as recorded by the learned Tribunal, cannot be interfered with by the High Court, as it does not give rise to any substantial question of law. With this, so far as the case in hand is concerned, it stands at much higher footing, inasmuch as positive finding of fact has been recorded by the learned Tribunal, which may be repeated by us, being as under: ...Besides, we find that the AO had not been able to point out any discrepancy in the quantity of stock hypothecated to the bank and the quantity of stock as per books of accounts. In our view, on the face of this finding, even if there is some difference in the valuation of the said quantity of the stock in the balance sheet, as against the valuation shown in the bank, it cannot be said to be resulting into any income from undisclosed sources, coming to the assessee, capable of being added in his income. 14. In our considered opinion, the tribunal while considering the matter has not committed any error in confirming the order of both the authorities by holding as under:- 19. We have heard the rival contentions and perused the material available on record. The ld. CIT(A) noted that during the course of search conducted at the premises of the assessee company, a number of incriminating documents were found pertaining to unaccounted sales, purchases and expenses of the business. It was further noted by the ld. CIT(A) that the assessee has admitted in the course of statement recorded during the course of search that total sales of all the units during FY 2008-09 was around Rs. 107 crores and the declared turnover was only around Rs. 10.36 crores. Further, ld. CIT(A) refers to the order of the AO and stated that the appellant has suppressed the turnover of the business substantially as may be seen from para 22 of the assessment order. It was further noted by the ld. CIT(A) that AO has accordingly rejected the book results declared by the appellant. It was further noted from the order of the AO that books of accounts were found to be not complete on the date of search and as per the stock statement as on 30.04.2009 filed by the appellant with the State Bank of Indore, the value of stock as on 30.04.2009 was Rs. 29,55,67,819/- and as against this, the actual stock found at the time of search on 20.05.2009 was Rs. 14,52,24,834/-. A specific show cause notice was issued to the assessee as to why the GP rate of 15% as held by the Tribunal in case of Anuj Kumar Varshney and others should not be applied on the above undisclosed turnover of Rs. 15,03,42,985/-. It was held by the ld. 14,52,24,834/-. A specific show cause notice was issued to the assessee as to why the GP rate of 15% as held by the Tribunal in case of Anuj Kumar Varshney and others should not be applied on the above undisclosed turnover of Rs. 15,03,42,985/-. It was held by the ld. CIT(A) that inspite of appropriate opportunity given to the assessee at the stage of assessment and even during the course of appellate proceedings, the assessee has failed to reconcile the differences in the value of stock found at the time of search and the stock as per books a copy of which had been filed with the bank. It was further held by the ld. CIT(A) in the absence of any tangible evidence being filed by the assessee, the only logical and rational course of action available would be to treat the differences in the value of stock of Rs. 15,03,42,985/- as turnover which has not been accounted for in the regular books of accounts. It was held by the ld. CIT(A) that the said position would be consistent with the statement given by the appellant at the time of search and also with the documents found at the time of search relating to concealment of turnover, purchases etc. It was further held by the ld. CIT(A) that where the explanation of the assessee is accepted that the stock found at the time of search was correct and was in accordance with the books of accounts, then it means that the statement of stock filed with the bank was not correct. It also leads to believe the value of stock shown in the statement was inflated and the appellant become liable for perpetrating a financial fraud on the bank. Accordingly, it was held by the ld CIT(A) that the only conclusion which emerges out of the above discussion is that the unaccounted turnover of Rs. 15,03,42,985/- has been made by the assessee during the period under consideration. The ld. CIT(A) thereafter applied GP rate of 15% on such unaccounted turnover following the decision of the Co-ordinate Bench in case of Anuj Kumar Varshney and others. 20. It is not in dispute that the assessee is found involved in accounting for both bogus purchases and bogus sales as well as there are unaccounted purchases and unaccounted sales as per the documents found and seized during the course of search. 20. It is not in dispute that the assessee is found involved in accounting for both bogus purchases and bogus sales as well as there are unaccounted purchases and unaccounted sales as per the documents found and seized during the course of search. In the statement recorded during the course of search, the director of the assessee company has admitted that during the FY 2008- 09, total sales are of Rs. 107/- crores as against recorded sales of Rs. 10.36 crores in its books of accounts and the fact that the said amount of Rs. 107/- crores has been brought to tax during the FY 2008-09 relevant to assessment year 2009-10. For the year under consideration, the quantification of undisclosed turnover has been determined by comparing the value of the physical stock as on the date of search i.e., 20.05.2009 and as per the stock statement submitted by the assessee with the State Bank of Indore on 30.04.2009. Given that the books of accounts were not complete as on the date of search, exact stock as per books on the date of search could not be worked out neither in terms of value nor quantitative tally. In post search proceedings and during the assessment and appellate proceedings as well, the assessee has failed to reconcile the same and offer any satisfactory explanation. Regarding valuation of such stock at the time of search, the AO has held that "the valuation was done by the experts, in the presence of assessee's employees dealing/managing the affairs on the date of search/seizure and no objection of any nature were raised by the employees at the time of search or just after the search. Now challenging the valuation on frivolous grounds is only an afterthought and just too devoid the investigation. Even the assessee has not been able to produce correct quantification and valuation after search, if it was of the view that valuation made by the search party was faulty or incorrect." The said findings of the AO remain uncontroverted before us and we do not see any justifiable reason to interfere with the same. Hence, it was held by the AO that there was deficiency of stock of Rs. 15.03 crores. As per Assessing Officer, deficiency of stock so found clearly proved that either fake purchase bills are introduced so as to increase stock or the sales are reduced. Hence, it was held by the AO that there was deficiency of stock of Rs. 15.03 crores. As per Assessing Officer, deficiency of stock so found clearly proved that either fake purchase bills are introduced so as to increase stock or the sales are reduced. The AO also referred to the statement of Shri K.K. Ameriya wherein he has stated that stock statements are inflated by way of showing bogus purchases, debtors and turnover. As per the Assessing Officer, it is conclusive proof of incorrectness of books of accounts and trading results of company. Hence the books of accounts and trading results were rejected by the AO. The AO thereafter applied G.P rate of 17% on declared turnover of Rs 15,40,38,479. It is here that the ld CIT(A) has stepped in and in our view, rightly so, where he figured out a seemingly apparent mistake in the final determination of quantum of turnover by the AO for the purposes of estimating the gross profits. As per ld. CIT(A), in absence of necessary reconciliation and any credible evidence filed by the assessee, the only logical and rational course of action would be treat the difference in the value of stock as unaccounted turnover which has not been accounted in the regular books of accounts. Based on material available on record, we agree with the findings of the ld CIT(A) that there is an unaccounted turnover which has not been disclosed by the assessee. However, we find that the ld CIT(A) has determined the unaccounted turnover by comparing the stock statement as on 30.04.2009 filed by the appellant company with the State Bank of Indore which discloses the value of Rs. 29,55,67,819 and the actual stock of Rs. 14,52,24,834/- found at the time of search on 20.05.2009. For the period April 2009 to March 2010 which includes the period starting 30.04.2009 and ending 20.5.2009, the assessee has disclosed a turnover of Rs 15,40,38,479. Accordingly, the assessee shall be eligible for credit of disclosed turnover for the period starting 30.04.2009 and ending 20.5.2009 which comes to Rs 88,62,487 by evenly distributing the declared turnover over a period of 12 months. Accordingly, the undisclosed turnover in the hands of the assessee company comes to Rs 14,14,80,498 (Rs 15,03,42,985 less 88,62,487). 15. Accordingly, the assessee shall be eligible for credit of disclosed turnover for the period starting 30.04.2009 and ending 20.5.2009 which comes to Rs 88,62,487 by evenly distributing the declared turnover over a period of 12 months. Accordingly, the undisclosed turnover in the hands of the assessee company comes to Rs 14,14,80,498 (Rs 15,03,42,985 less 88,62,487). 15. In our considered opinion, the tribunal while considering the matter has rightly observed that either the bills are mainpulated so as to increase stock or the sales has been reduced. 16. In that view of the matter, the view taken by the authorities is just and proper. Therefore, no substantial question of law arises. 17. Hence, the appeals stand dismissed.