TMI Blog2006 (3) TMI 228X X X X Extracts X X X X X X X X Extracts X X X X ..... 1-1011. (4) UGP-4890. (5) UP-01-424. (6) UHD-5063. (7) UP-01-655. 5. As per police report, the above trucks were coming from Almora and were proceeding to Haldwani. The goods of the above trucks were requisitioned under section 132A(1) of the Income-tax Act, 1961 from the Depot Officer, Lease Depot, Forest Department, Kathgodam who had custody of the goods of the above trucks. From the statement of the drivers of these trucks it was not clear that who were the real owner of these trucks goods, hence these drivers were treated as owners of the goods, because the goods were in their immediate possession. Accordingly, the notices under section 158BC of the Income-tax Act, 1961 were issued on 1-11-1996 to the following drivers:- (1) Shri Ramesh Chandra Pathak. (2) Shri Gopal Sharma. (3) Shri Lalit Mohan Pethshali. (4) Shri Kanti Swaroop Rawat. (5) Shri Sanjay Joshi. (6) Shri Kamala Pati Joshi. (7) Shri Ram Singh. All the above notices returned unserved. Again on 30-6-1997, the above notices were again issued and again they remained unserved. Later on, summons under section 131 of the Income-tax Act, 1961 were issued on 18-8-1997 to all the owners of the trucks ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... --------------------------------------------- Opening stock as on 1-4-1996 Rosin Turpentine Varnish 52.28 qntls. 3,210 litres. 7,160 Its. Goods received for sale from M/s. Bhatt Industries. 113.90 qntls. 1,000 litres. 2,800 Its. Goods received for sale from M/s. Rajeev Enterprises. 40.50 qntls. 697 litres. - Goods manufactured from 60 qntls. Of leesa. 40.50 qntls. 697 litres. - --------------------------------------------------------- 247.18 qntls. 5,604 litres. 9,960 Its. --------------------------------------------------------- Against the above stock, the sale of goods, as per stock register, were as under:- ----------------------------------------------- Rosin Turpentine Oil Varnish 110.5 qntls. 1,000 litres. 2,800 litres. ----------------------------------------------- The assessee, therefore, submitted that it had sufficient stock of finished goods with it. It was further submitted that the sales were on credit to M/s. Pushkar Industries for the first time. For the purpose of ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regarding this purchase of raw-leasa of 60 qntls. has been furnished. Thus, it is noticed that exact opening stock of these goods, the assessee could not prove the receipt of goods from other parties and own manufacturing of the above products, as mentioned above. Thus, the stock position furnished by the assessee for Haldwani sales depot was not believed by the Assessing Officer. The Assessing Officer in view of the above facts held that the goods were coming from Almora where the assessee has no stock of finished goods. As such total goods in these two trucks remained unexplained and investment therein was treated as income of the assessee from undisclosed sources under section 69 of the Income-tax Act, 1961. (3) What was the rate of sale of above goods? The Assessing Officer as regards the rates of these goods found that the assessee has shown the sale rate of Rosin at Rs. 400 per tin and Turpentine Oil at Rs. 10 per litre and that of Varnish at Rs. 15 per litre. As the rates of these goods as shown by the assessee appeared low, the local enquiries were made. On the basis of local enquiries, it was gathered that the average market rates of these goods are as under:- Rosin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Police Station held that the contention of the assessee that the trucks were coming from Haldwani to Almora is not correct. On the second issue, the Assessing Officer further held that the trucks were carrying on unauthorized goods and does not tally with the stock register of the assessee. The same reasoning had been given as had been given in the case of other assessee and, therefore, in the circumstances of the case, it was held that investment in above stock was treated as unexplained and treated as income of the assessee from undisclosed sources under section 69 of the Income-tax Act, 1961. The Assessing Officer on the basis of the rates prevailing for the items intercepted by the Police estimated the value of the undisclosed investment in the stock and profit and computed the undisclosed income at Rs. 10,86,500. Both the assessment orders by different assessees have been challenged before us in first appeals. 9. The learned representatives of both the parties have argued in IT Appeal No. 268 (Delhi) of 1997 in the case of Laxmi Varnish Udyog and have submitted that the facts are similar in both the cases the order in the case of M/s. Laxmi Varnish Udyog may be followed in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or Commissioner) may authorize any (Joint Director), (Joint Commissioner), (Assistant Director or Deputy Director), (Assistant Commissioner or Deputy Commissioner) or Income-tax Officer referred to as the requisitioning officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, to deliver such books of account, other documents order assets to the requisitioning officer. Sub-clause (2) of section 132A(1) provides that on requisition being made under sub-section (1), the officer or authority referred to in clause (a) or clause (b) or clause (c), as the case may be, of that sub-section shall deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. Sub-clause (3) of section 132A(1) provides that where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of sub-sections (4A) to (14) (both inclusive) of section 132 and section 132B shall apply. The requirement of the aforesaid provisions would thus be that in case where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A(1) provides for assessment of undisclosed income as a result of search and provides that "notwithstanding anything contained in any other provisions of this Act, where after the 30-6-1995, a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under sect ion 132A in the case of any person, then the Assessing Officer shall proceed to assess the undisclosed income in accordance with the provisions of this Chapter." The combined reading of this provision would clearly prove that the moment the requisition is issued under section 132A to officer or authorities who seized the goods/assets, then the Assessing Officer shall have to proceed against the concerned assessee for framing the block assessment. The later part of section 132A provided in sub-sections (2) and (3) provides that presumption against the assessee, in case the delivery of the assets or goods have been made to the Income-tax Authority. In the aforesaid case, the learned counsel for the assessee did not provide any material on record to show that the goods were handed over to the court for any purpose. The custody of the goods or assets in this case as recovered from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as also observed that any order could be passed by the court for delivery of the goods. Therefore, delivery of goods to Income-tax Authorities is not proper in pursuance of the requisition issued under section 132A of the Income-tax Act, 1961. The Hon'ble High Court accordingly, granted the release of the properties seized from the house of the petitioner and also granted a compensation. The facts of this case are clearly distinguishable. In the aforesaid case, the police recovered articles in pursuance of the provisions contained under section 102 of the Cr. P.C. This provision provides that police may seize the articles which are suspected to be connected with the some offence of the criminal in nature. No proper case, therefore, would have been registered till it is established that the goods are connected with the crime that to whom these articles are belonged in fact. The Hon'ble High Court considering the submission of the petitioner the Police Officer acted illegally held that provisions of search and seizure have not been properly complied with by the police authorities and when the seized goods were suspected to be connected with the offence and then the same should have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, the learned DR relied upon the orders of the Assessing Officer and submitted that the assessees never disputed ownership or possession of the seized goods. The learned D.R. further submitted that the drivers are convicted for the offence of carrying the goods without the permission of the Forest Department and the releasing of the goods in favour of the assessee has been rejected by the Criminal Court, Nainital. Therefore, it was for the assessee to explain investments in the goods seized from the possession of the truck drivers. The learned D.R. submitted that since in this case the assesses have failed to make any satisfactory explanation before the Assessing Officer with regard to the transportation of the goods illegally, therefore, the Assessing Officer was justified in treating it to be undisclosed income in the block period. The learned D.R. further submitted that the Assessing Officer has rightly concluded that the goods were transported from Almora for which no valid explanation has been filed and as such availability of the stock as per stock register is unbelievable. The learned D.R. further submitted that the trucks were not carrying any valid permission and no stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission or through the valid documents. In the absence of any sufficient material before the Assessing Officer, we are unable to interfere into the findings of the Assessing Officer. It is undisputed fact that truck drivers were carrying on goods/assets on behalf of both the assessees. It is also undisputed fact that the assessee owned, controlled and possessed the goods in the trucks which were being transported illegally in the midnight. Onus, therefore, shifted upon the assessee to prove that the goods were being carried out through the valid permission and on the strength of the valid documents. The assessee could not explain those facts before the Assessing Officer. The fact remains that the assessees have not been able to account for the investments in the finished goods being transported in the midnight in the trucks. The Income-tax Authorities are entitled to pass assessment order by taking into consideration the principle of pre-ponderance of probability. The Income-tax Authorities on proper appreciation of the facts and material gave a specific finding against the assessee which have not been rebutted by the assessee by any cogent or reliable material. The goods/assets wer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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