TMI Blog2002 (1) TMI 272X X X X Extracts X X X X X X X X Extracts X X X X ..... ced that the assessee had purchased lime stone from Shri M.L. Grover, Katni, as under:-- ----------------------------------------------------------------------------- S.No. Bill No. Date Rate per MT Amount weight ----------------------------------------------------------------------------- 1. 44/90-91 28-2-1991 439.950 m.t. Rs. 29,916.10 @ Rs. 68 2. 93/90-91 28-2-1991 539.745 m.t. Rs. 36,702.66 @ 68 3. 42/90-91 31-1-1991 559.745 m.t. Rs. 38,062.00 @ 68 4. 41/90-91 -do- 360.790 m.t. Rs. 24,533.72 @ 68 ----------------------------------------------------------------------------- 3. The Assessing Officer observed in the asstt. order that it is hardly believable that any mine owner would sale lime stone to the assessee only in the month of February and March, 1991. He accordingly deputed his Inspector to contract Shri M.L. Grover, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned CIT(A) who dismissed the same observing as under:-- "3. At the time of hearing, learned counsel for the appellant argued that the Assessing Officer was not justified in making an addition of Rs. 1,29,215 on account of inflated purchases. I have gone through the order of the Assessing Officer, facts of the case and the submissions of the learned counsel and I find that the order of the Assessing Officer is perfectly correct. It is important to mention here that in this case appeal against quantum asstt. has been disposed of by the CIT(A). This issue has also been discussed in the appellate order but has not adjudicated as there was no specific ground in the appeal." Not being satisfied with the order of the CIT(A), the assessee is in appeal before us. 5. Shri G.N. Purohit, AR, appeared for the assessee, relying on para 3 of CIT(A)'s order dated 11-8-1992 in appeal No. Kat./15-92-93 and provisions contained in section 154(1A) of Income-tax Act contended that the order of Assessing Officer got merged in the order of CIT(A), therefore Assessing Officer cannot rectify the assessment order under section 143(3) dated 14-1-1992. The learned counsel filed a paper book contain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that there was a mistake in the assessment order under section 143(3) dated 14-1-1992 as by mistake the addition of Rs. 1,29,215 which was discussed by the Assessing Officer in the assessment order was remained to be included in the total income. Vide order under section 154 dated 11-11-1992, the Assessing Officer rectified the said mistake which, in our opinion, is a glaring and obvious on the face of it and the Assessing Officer was fully justified in rectifying the same. His actions are also upheld by the learned CIT(A). Before us, the learned counsel contended that a certificate from M/s. Rameshwar Enterprises was filed before CIT(A) wherein they have received payments against Bill Nos. 41 to 44 and no inspector visited for enquiry before them. In the assessment order, the Assessing Officer clearly mentioned that from verification of bill file he found that assessee made purchases from Shri M.L. Grover, Katni and who denied to have made any sale to assessee namely M/s Uttam Lime Traders, Katni. If there was any mistake in mentioning the name of the seller or name and address of the person who has supplied the lime stone against bill Nos. 41 to 44 in that event the assessee co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The CIT(A) vide his order dated 11-8-1992 has recorded the finding, as below: "I have considered his submissions, but I do not find any merit in them. Although in the assessment order, the learned Assessing Officer proposed addition of Rs. 1,29,215. In the ultimate computation, no such addition is made. Therefore, the appellant cannot be said to be aggrieved. As such, no adjudication is required." The Assessing Officer on 11-11-1992 passed an order under section 154 wherein he made the addition of Rs. 1,29,215 to the total income of the assessee. The assessee filed an appeal to the CIT(A) against this order under section 154. The CIT(A) vide his order dated 30-1-1997, dismissed the assessee's appeal with the following observations:-- "3. At the time of hearing, learned counsel for the appellant argued that the Assessing Officer was not justified in making an addition of Rs. 1,29,215 on account of inflated purchases. I have gone through the order of the Assessing Officer, facts of the case and the submissions of the learned counsel and I find that the order of the Assessing Officer is perfectly correct. It is important to mention here that in this case appeal against quantum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition is made for low yield, no separate addition for inflation of purchase is called for. It is also undisputed that the Assessing Officer made the addition of Rs. 3,86,486 for low yield, which was deleted by the CIT(A), but on further appeal by the Department to the I.T.A.T., the I.T.A.T. partly reversed the order of the CIT(A) and directed the Assessing Officer to work out the addition by adopting the yield at 52 per cent as against 50 per cent shown by the assessee and 55 per cent adopted by the Assessing Officer. Therefore, in my opinion, no separate addition of Rs. 1,29,215 in inflation of purchase is called for. Once the addition is not justified on the basis of abovestated facts, the same cannot be added even by invoking the provisions of section 154. Accordingly, I delete the addition of Rs. 1,29,215 made by Assessing Officer by order under section 154. 7. In the result, the assessee's appeal is allowed. REFERENCE UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 As we have differed in our opinion on the following point, we request the Hon'ble President of Income-tax Appellate Tribunal to refer the point of difference for hearing by a Third Member under section 255 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... @ 68 ----------------------------------------------------------------------------- 3. The Assessing Officer further noted that above bills were in continuous/serial number and he expressed his apprehension as to how any mine owner would sell lime stock to the assessee only in the months of February and March 1991. According to Assessing Officer he deputed Income-tax Inspector to contact M.L. Grover who denied to have made any sale of lime to Uttam Lime Traders, Katni, the assessee. The Assessing Officer also observed that assesee was not maintaining any stock register and in the absence of that it was not verifiable whether the lime stone so purchased reflected in the closing stock or not. On the basis of above he was of the view that it was a case of inflated purchases and he worked out the total amount of above purchases to the extent of Rs. 1,29,215 and observed that the same is to be added to the total income. It is also relevant to point out that Assessing Officer rejected the rate of yield shown by the assessee and adopted the yield of lime at 55 per cent and made an addition of Rs. 3,86,486. 4. The noteworthy thing is that while computing the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for this argument is that Assessing Officer while completing the assessment had looked into the yield of lime as low in comparison to other traders of the same branch in Katni and in that sequence also noted that some of the purchases were not proved to be genuine. Ultimately he was of the view that yield of lime was low and he proceeded to adopt the rate of yield at 55 per cent as against rate of yield of 50 per cent returned by the assessee and made the addition of Rs. 3,86,486 to the trading result and that must be the reason that no addition of Rs. 1,29,215 on account of inflated purchases was made by the Assessing Officer and that too consciously because this amount must have been included in the trading addition. Accordingly, the contention is that there was no mistake in the assessment order and Assessing Officer should not have proceeded to make addition of Rs. 1,29,215 under section 154 of the Act. 7. So far as merits of the case is concerned, learned counsel for the assessee submitted that assessee had purchased lime stone from M/s. Rameshwar Enterprises through four bills reproduced in the assessment order during the months of January and February 1991. It was an ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. Rameshwar Enterprises through which these purchases were effected. The learned counsel submitted that all these documents were sufficient to prove that purchases made by assessee from Rameshwar Enterprises were genuine and question of inflated purchases does not arise and Assessing Officer should have relied upon these documentary evidence. 9. The learned counsel also submitted that in the first inning the CIT(A) did not decide the issue involved in the present appeal on the ground that Assessing Officer had not made the addition in the computation of income that is why the assessee did not challenge the addition in the appeal preferred by the assessee before the Tribunal. When Assessing Officer made the addition under section 154 of the Act then assessee again challenged that very addition before the CIT(A) who had decided the issue vide order dated 30-1-1997 after noting as under: "3. At the time of hearing, learned counsel for the appellant argued that the Assessing Officer was not justified in making an addition of Rs. 1,29,215 on account of inflated purchaser. I have gone through the order of the Assessing Officer, facts of the case and the submissions of the learned c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had failed to prove the alleged purchases from Rameshwar Enterprises and observed in the assessment order that whole of the amount of Rs. 1,29,215 was to be added back to the total income as it was a case of inflated purchases and disallowed the same. Learned D.R. contended that this was mere mistake on the part of Assessing Officer that while computing the total income he directed this amount to be added to the total income but could not add this amount in total income of assessee and he was justified to rectify the said mistake as the same was apparent from the record. 14. So far as merit of the additions are concerned, the learned D.R. submitted that assessee himself had stated to have made the purchase from M/s. Rameshwar Enterprises owned by Mr. M.L. Grover and Assessing Officer was justified in deputing his Inspector to verify from M.L. Grover about the said purchases who denied such transactions. In the absence of any other evidence the Assessing Officer was justified to treat the same as inflated purchases. The assessee had not filed the copies of the bills of M/s. Rameshwar Enterprises nor copy of account of that concern in the books of assessee were furnished before Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontext it was incumbent upon the Bench to consider the material available on record. 17. At the very out set it is relevant that Assessing Officer while completing the assessment had taken note of the report of the Inspector, as reproduced above in earlier part of this order. In his report the Income-tax Inspector has specifically mentioned that M.L. Grover had categorically denied to be the proprietor of M/s. Rameshwar Enterprises and promised to produce the proprietor on 16-12-1991. It was also mentioned by the Income-tax Inspector in his report dated 11-12-1991 that he would submit the complete report after verification of bill books of both the parties. The very basis of addition is report of Income-tax Inspector but that report is incomplete nor the same was confronted to the assessee nor the Assessing Officer asked the assessee to produce the proprietor of M/s. Rameshwar Enterprises. It was the duty of the Assessing Officer to have waited for second report of the Income-tax Inspector or called upon the assessee to produce the proprietor of M/s. Rameshwar Enterprises. Both these acts have not been done by the Assessing Officer and initial mistake lay with the Assessing Offic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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