TMI Blog1998 (8) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... result of certain queries raised during the course of such examination, filed a revised return on 10th Jan., 1990, in which he declared an additional income of Rs. 3,46,000 on account of certain unverifiable expenses. The AO recorded the facts in the order sheet dt.10th Jan., 1990, as under: "10th Jan., 1990 In pursuance of investigation carried out by me today in this case where certain purchases were suspected to be bogus, I had identified certain vouchers for verification of purchases. Assessee admitted concealment on account of unverifiable purchases and filed the revised return declaring additional income of Rs. 3.46 lakhs. However, taxes have not been paid. Therefore, this return will be considered to be non est till the taxes have been paid. This is without prejudice to penalty imposable under s. 271(1)(c)." 2.1. The aforesaid order sheet entry of contemporary date clearly indicates that the assessee has offered the additional income of Rs. 3,46,000 in the so-called revised return furnished on10th Jan., 1990, after so-called detection of such bogus purchases by the AO during the course of examination of the books of accounts on10th Jan., 1990. The learned Departmental R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oration at the address given by the assessee, which was received back undelivered with the remark "left W/A". The learned Departmental Representative submitted that the AO had thus established the fact that the purchases debited by the assessee from various suppliers was bogus. He, therefore, issued a letter dt.17th Jan., 1990, to the assessee. The assessee vide letter dt.22nd Jan., 1990, submitted the reply in which the particulars of purchases made from 5 parties aggregating to Rs. 3,45,675 were given. Such particulars of bogus purchases were given by the assessee for the first time vide letter dt.22nd Jan., 1990, before which the AO had collected adequate material in the form of a statement of the concerned parties which proved the existence of such concealed income in the form of bogus purchases recorded in the books of accounts of the assessee. He thus strongly urged that the assessee is guilty of concealing the income represented by bogus purchases of Rs. 3,46,000 in the original return. The assessee had thus filed inaccurate particulars of income and also concealed its income in the original return. The true and full particulars of such income were also not furnished along ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax of Rs. 87,192 was made by cheque, which was encashed only after few days from the date of furnishing of the revised return on10th Jan., 1990. 4.2. The learned counsel also relied upon the judgments Bombay Cloth Syndicate vs. CIT (1995) 214 ITR 210 (Bom), CIT vs. Sri Rajaram Cloth Stores (1995) 214 ITR 262 (Mad), CIT vs. J.V. Appadurai Chettiar Co. (1996) 221 ITR 849 (Mad), F.C. Agarwal vs. CIT 1976 CTR (Gau) 82 : (1976) 102 ITR 408 (Gau) approved by the Hon ble Supreme Court in the judgment G.C. Agarwal vs. CIT (1991) 95 CTR (SC) 257 : (1990) 186 ITR 571 (SC). The learned counsel thus strongly supported the order of the CIT(A). 4.3. In the rejoinder, the learned Departmental Representative submitted a copy of reply dt.22nd Feb., 1990, submitted by the assessee before the AO. In this letter, the assessee has admitted that the bills for purchases aggregating to Rs. 3,46,000 surrendered as income in the revised return, were taken out of the file of purchase invoices, as the assessee thought that no useful purpose would be served by keeping them along with other purchase vouchers, particularly in view of the voluntary surrender of the entire amount of Rs. 3,46,000 instead of res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he books of accounts, the AO had examined, inter alia, the accounts of various creditors. The list of sundry creditors as at the end of the relevant previous year as on31st March, 1989, included the balances in the accounts of the 5 parties in question as per details mentioned below: Rs. 1. M/s Partap Fabrics, Shop No. 7, Kucha Khan Chand, Nai Sarak,Delhi. 35,150 2. M/s Ankur Textiles, 48, Manohar Market, Kt. Neel, Chandani Chowk,Delhi. 40,711 3. M/s N.K. Textiles, 5478, Chandni Chowk,Delhi. 77,846.20 4. M/s Naresh Traders, 5655, Kucha Khan Chand, Nai Sarak,Delhi. 36,592.50 5. M/s Sandhya Sales Corporation, Maharaja Chamber, Salabatpura,Surat. 1,55,375.87 Total 3,45,675.57 5.2. However, the AO in the first order-sheet entry of10th Jan., 1990, required the assessee to produce Shri Hari Mohan Gupta, creditor who was not one of the aforesaid 5 parties. The assessee after such examination of books by the assessee immediately prepared a revised return on that very date i.e. on 10th Jan., 1990, and surrendered the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may be right in entertaining reasons to suspect the genuineness of the purchases. After such investigations, the AO will have to give a show-cause notice to the assessee and will also have to provide copies of the statement and material gathered behind the back of the assessee with a view to allow an opportunity to the assessee to submit his defence and evidence in rebuttal of the material gathered against him. The AO will then have to consider the assessee s reply to such show-cause notice and thereafter he will have to draw his own conclusions. At this stage, it can be said that the concealment has been detected by the AO. If these sequence of events are considered, it will be found that the AO scrutinised the books on10th Jan., 1990. At this stage, the AO did not even arrive at tentative or a prima facie satisfaction about the existence of any bogus purchases. He only made up his mind to conduct further investigation. Before the AO started conducting further investigation, the assessee filed a revised return on10th Jan., 1990, in which the amount of unverifiable purchases to the tune of Rs. 3,46,000 were surrendered. The AO made investigations only after furnishing of the revis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e framing the assessment. Similarly there is no doubt that the addition of Rs. 3,46,000 has been termed as addition on account of certain purchases but the addition made is not of the above what the appellant had on their own declared in the revised return. The issue regarding this addition has been discussed in detail in the appeal order with respect to the appeal filed against the penalty order under s. 271(1)(c) vide appeal No. 453/90-91 dt.30th Jan., 1991. Further, the observation regarding this addition being on account of bogus purchases may not be wrong in view of the enquiries conducted by the AO in this respect but considering the fact that this income was declared voluntarily before such detection by the AO, there is no extra addition to the income returned as per the revised return on this account. The appellant s prayer, therefore, that the order should be set aside and the additions be deleted cannot be accepted because the order is not without jurisdiction and the additions have been made on the basis of a voluntary surrender made by the appellant through a revised return which has been duly considered and taxed by the AO. In fact, there are no such additions to the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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