TMI Blog1994 (11) TMI 167X X X X Extracts X X X X X X X X Extracts X X X X ..... ---------------------------------------------------------------------------------------------------------------- S. No. Party's Name Sales on basic Basic value of Difference value as per sales recorded incentive bonus in assessee's paper seized book -------------------------------------------------------------------------------------------------------------------------------------------------- 1 . M/s Sethi General Store 25,32,516 18,77,955 6,54,561 2 . M/s Duggal Crockeries 11,40,961 3,34,605 8,06,356 3 . M/s Capital Crockery 12,79,416 8,56,158 4,23,258 --------------- 18,84,175 -------------------------------------------------------------------------------------------------------------------------------------------------- For assessment year 1989-90, discrepancy was noticed as under : -------------------------------------------------------------------------------------------------------------------------------------------------- S. No. Name of the dealer Basic value Basic value Sale of goods as per sale as per suppressed register for Annexure A-24 Basic value 88-89 (Annex. statement of of goods sold B-4) incentive bonus ----------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leaded before the Assessing Officer that when sales made to these parties is also included, there would be no discrepancy as alleged. A reconciliation statement was also furnished before the Assessing Officer. Assessee filed confirmations from two distributors, namely, M/s Duggal Crockery, Delhi and M/s Capital Crockery Stores confirming the version of the assessee. A certificate from M/s Sethi General Stores, however, could not be filed on the ground that the party was not available at the relevant time. The Assessing Officer did not accept the explanation of the assessee as according to him, there were no supporting records available with the assessee in this regard. The Assessing Officer considered the explanation of the assessee as an innovative one and ' after thought '. Assessing Officer was of the view that assessee has made a frantic hit to somehow tally the sales figures available to incentive bonus by locating suitable bills that can match them. He accordingly concluded that the amounts of sales available on the incentive bonus statement are correct figures of the sales and the difference between the sales available on the seized paper and those recorded in the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... adverse comments have been given by the excise authorities in respect of the statutory records maintained by the assessee. Similarly, assessee is liable to pay sales-tax and assessments have been made by the sales-tax authorities without adverse comments. The Assessing Officer, according to the learned counsel, has not examined the parties. Shri Monga contended that assessee was free to arrange his affairs in the manner best suited to his business. The Assessing Officer without making proper enquiries and collecting any material in rebuttal has proceeded arbitrarily in rejecting the claim of the assessee. The learned counsel placed reliance on the decision of the J K High Court in the case of International Forest Co. v. CIT [1975] 101 ITR 721 in support of the contention that the onus in regard to the suppression of sales was on the revenue. The learned counsel also invited our attention to the written explanations furnished before the authorities in support of the contention that the discrepancies pointed out by the Assessing Officer had been satisfactorily explained. 6. The learned counsel further contended that assessee had been paying incentive bonus in the past on the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , to claim that deduction was allowed to him on account of incentive bonus for the past. The learned D.R. further contended that there was discrepancy in the amount also when assessee tried to include the sales made to other dealers for the purposes of computation of incentive bonus. The amount did not tally. Referring to the statement for assessment year 1989-90, the learned D.R. pointed out that in each case there was a difference of Rs. 4 to Rs. 5. This, according to the learned D. R., establishes the fact that assessee has tried to pick up certain sale bills to be included in the case of sales made to other dealers for the purposes of payment of incentive bonus so as to tally the statement seized during the course of search operations. It was accordingly pleaded that the additions made by the Assessing Officer may be confirmed. 8. We have given our careful consideration to the rival contentions. It is by now well-settled that when certain documents etc., are found from the possession of the assessee during the search operations, burden lies on the assessee to explain the nature of the transactions recorded in such documents, statements or books of account. Assessee is duty bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery Store 12,79,416 8,56,158 4,23,258 -------------- 18,84,175 -------------------------------------------------------------------------------------------------------------------------------------------------- In order to explain the above-mentioned discrepancy the assessee's representatives submitted that the incentive was worked out to above mentioned distributors not only on sales directly effected to them but also on sales to some other parties which came through them. Thus as per assessee's statement if the sales of M/s Verma Crockeries and Feather Touch amounting to Rs. 33,567 and Rs. 6,30,387 respectively are accounted for in the sales of Sethi General Stores for the purpose of incentive bonus and sales made to Raju Crockery at Rs. 10,872 and Crockery Centre Rs. 7,95,534 are accounted for in the sales of M/s Duggal Crockery and sales made to Cheap and Best amounting to Rs. 4,23,258 are included in the Capital Crockery Store, then there will be no discrepancy in the case of M/s Duggal Crockery and Capital Crockery Stores. In regard to some discrepancy still remaining in the case of M/s Sethi General Store, the assessee has stated that it was due to non-adjustment of cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is contained in letter dated 26th March, 1991 for assessment year 1988-89 videpara 6 (placed at pages 27 to 29 of the paper book) which is reproduced hereunder : " Incentive to dealers : We gave incentive to those dealers whose sales are more than the target fixed by us. They are entitled to incentive if the turnover made to them or through them exceeded the fixed target. The incentive is calculated on the basic value of the sales (excluding the excise duty and sales-tax) exceeding the target figure. We have prepared a chart of the customers showing the sales made to them or through them to arrive at the eligibility of the dealers who are entitled to incentive. The said statement has been seized by the authorised officials during search operation in July 1985. In the case of Capital Crockery House, Duggal Crockery House and Sethi General Stores the sales of the following dealers are also included in the target figure of these dealers. The details of it are given hereunder : (i) In the turnover of the Capital Crockery House, the basic value of the sales made to Cheap and Bench furniture is also included and it was made through Capital Crockery House. (ii) In the turnover of D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been made. The assessee-company maintains records wherein basic value of the turnover of various dealers including basic value of sales made through them are recorded and at the end of the year a statement is prepared for working out incentive bonus. This statement has been seized under section 132 of the Income-tax Act, 1961. There is no after thought about the incentive bonus as mentioned by the Deputy Commissioner of Income-tax but a fact which is verifiable from records. It is not the assessee's mentioned above, past history and credits of bonus given to the respective accounts of the dealers. As far as parties connected with the dealers are concerned, there are only 2 to 3 parties attached with a dealer and hence it is not at all difficult to remember their names or to identify them with reference to the dealers. " 11. Confirmation certificates from Capital Crockery House and Duggal Crockery had been flied before the Assessing Officer. As is evident from the above explanation furnished by the assessee the finding of the Assessing Officer that the " fact of inclusion of sale to X in the sales of Y are not borne in any of the assessee's records " is incorrect and contrary to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt maintained by him. We are not holding that whatever is recorded in the books of account, the Assessing Officer is bound to accept the same. But what is required under law is that the explanation of the assessee and the books of account maintained by him in the regular course of business have got to be tested and scrutinized. Assessing Officer is not empowered to act arbitrarily when assessee is furnishing an explanation which is supported by the relevant entries and other documents and also flies certificates from the dealers affirming the version of the assessee. The Assessing Officer had two options. Either to accept the explanation of the assessee as correct or to make further enquiries. In this case apart from rejecting the explanation of the assessee, Assessing Officer has not made any further enquiry whatsoever. The case of the Assessing Officer is based on mere suspicion. Suspicion is mother of enquiry, but it does not take place of proof. If the explanation of the assessee was suspected to be after thought and unreliable Assessing Officer would have discharged his duties properly by making further enquiries. That would serve a dual purpose. Either the suspicion of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xaggerated or incorrect, if the authorities thought, that certain things which had been left vague and obscure by him needed clarification they ought to have sent for and examined him. Without adopting that course they ought not to have ignored his report. The sales alleged to have been made in favour of Shri Abdul Rehman Guru of Doabgah could also have been easily verified by the Income-tax Officer by sending for the former and examining him. Without doing so it was not just and proper for the Income-tax Officer to have treated it as fictitious and thus to have abstained from relying on it. " In the present case, Assessing Officer did not ask the assessee to furnish certificates/confirmations from the dealers whose turnover was included in the turnover of others. The Assessing Officer also did not make any enquiries of his own from such dealers. The taxpayers are not experts so as to judge the mind of quasi-judicial authority. Sometimes assessee considers some evidence to be sufficient to support its claim. If the Assessing Officer thinks otherwise, nothing prevents him in informing the assessee about the inadequacy of the evidence. An Assessing Officer exercising quasi-judicia ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
