TMI Blog2005 (6) TMI 558X X X X Extracts X X X X X X X X Extracts X X X X ..... found that such alleged suppressed production of tins viz., 28,284 tins were not reflected in the closing stock. The question that the Tribunal was required to pose to itself was as to whether Revenue was justified in making addition on such count especially when Tribunal itself had recorded in no uncertain terms that there was no production of undisclosed oil and oil-cakes. The Tribunal having failed to address itself in this regard would go to show as an additional factor that the explanation tendered by the assessee was not unreasonable, was not fanciful and was duly supported by evidence and material on record and the Tribunal failed to not only appreciate but even consider the said evidence. It is necessary to record that the assessee had made a specific grievance before CIT(A) to the effect that though statement of the concerned person of M/s Girishchandra Co. had been recorded by the assessing authority, despite a specific request, no opportunity to cross-examine the said party was offered, and to the contrary the assessing authority had relied upon the said statement. The CIT(A) has mentioned the aforesaid objection in paragraph No. 7.1 of his order. The Tribunal has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression of sale price of 678 tons of oil-cakes outside the books of account ? At the instance of assessee 1. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the evidence in the form of certificates and statements filed during the course of assessment proceedings ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the purchases of tin plate for manufacture of tins were not made on the basis of weight but were made on the basis of number of component parts ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the value of 28,284 tins was to be added in the income of the assessee ? 4. Whether, on the facts and in the circumstances of the case, there was evidence to justify the finding of the Tribunal that there was suppression of production of 28,284 tins by the assessee ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the evidence led by the appellant in support of its contention that the purchases were made on the basis of weight and not on the basis of numbers ? 6. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 28.13 per cent as against 28.83 per cent in the preceding year, whereas the quality allowance received by the assessee during the year towards inferior quality of groundnut was comparatively less than the preceding year. Similarly, there was exceptional increase in the oil-cakes production : this year the production was 51.75 per cent as against 43.80 per cent in the immediately preceding year. That, considering direct nexus between the production of oil and oil-cakes, higher percentage of oil-cakes production during the year under consideration supported the conclusion of the assessing authority that the assessee had suppressed production of oil and oil-cakes. He, therefore, urged that the addition made by the AO was required to be restored answering the question raised at the instance of the CIT in favour of the Revenue. 7. Mrs. Soparkar, learned advocate appearing on behalf of the assessee, submitted that the assessee had maintained regular books of account showing complete quantitative details in relation to production of oil and oil-cakes and no specific discrepancy had been found by the AO in the record maintained by the assessee. That books of account duly supported by v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration is less when compared to the percentage of production in case of the assessee. On the basis of these factors, the Tribunal has came to the conclusion that the CIT(A) was justified in deleting the additions on account of alleged suppression of unaccounted sales of oil and oil-cakes of ₹ 54,23,457 and ₹ 12,44,130, respectively. 9. The aforesaid findings recorded by the Tribunal are supported by the evidence which is available in the paper book and no material has been pointed out so as to take a different view of the matter. The Tribunal has taken into consideration all relevant facts for the purpose of adjudicating the issue as to whether there was any suppressed production of oil and oil-cakes resulting in sales outside books and consequently undisclosed income. In the result, it is not necessary to reiterate the reasons and the factors which have weighed with the Tribunal while deleting the additions on this count and there being no infirmity in the order of the Tribunal in relation to this issue, no interference is called for. 10. The question referred at the instance of the Revenue is, therefore, answered in the affirmative i.e., in favour of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce that should have been accounted as production 2,76,272 Less : 2,47,988 Balance of production of tins suppressed 28,284 13 The AO while doing so has not accepted the explanation tendered by the assessee that though the purchase bills reflected purchase of component sets at the rate per set, in fact the bills were so prepared considering the legal impediment that tin plates could be sold only to small-scale manufacturers as per Government order and hence the sets and the rates were mentioned in numbers though purchases were, in fact, on basis of weight. The assessee in support of such contention had placed on record various evidences from its own possession, from manufacturer of the tins, certificates from suppliers, etc. The AO had also examined two of the suppliers but thereafter recorded that there was nothing to suggest in the statements that the purchase bills which were very specific and clear as to the nature of goods supplied to the assessee were in any manner incorrect. It is further stated that from the chart supplied by the assessee in almost all cases each component set was weighing about 1,000 gms. or slightly more, after process of soldering and affixing of clip, Ka ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see against retention of addition to the extent of 23,568 tins as being suppressed production and the Revenue against relief to the extent of 4,716 tins granted by CIT(A). The Tribunal for the reasons stated in its order dismissed the assessee's appeal on this count and allowed Revenue's appeal restoring addition as made by the AO holding that there was suppressed production of 28,284 tins. So far as valuation was concerned, the Tribunal directed the AO to adopt the rate which was applicable for production of the other tins as per books of account instead of applying average rate and restored the matter to AO for this limited exercise. 16. Mrs. Soparkar, learned advocate appearing on behalf of the assessee, invited attention to the explanation tendered by the assessee vide letters dt. 14th Nov., 1984, 26th Feb., 1985 and 11th March, 1986 which were accompanied by various enclosures to submit that there was adequate material on record to show that the purchases were on the basis of weight in kilograms and not on the basis of number of component sets. She invited attention to various certificates issued by the suppliers as well as other similarly situated purchasers to emphas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tificates or statements of subsequent dates cannot override the clear and unambiguous description given in the respective purchase invoices . The Tribunal thereafter observes that the correctness of the various purchase invoices in respect of component sets has not been questioned or disputed by the assessee or by the suppliers. It further reiterates that in view of clear description given in most of the purchase bills it was not inclined to accept the assessee's contention that such tin plates were, in fact, purchased on the basis of weight and the number of component sets was mentioned in the purchase invoices merely to comply with the relevant regulation in force relating to sale and supply of tin plates. Thereafter, the entire order of the Tribunal proceeds on the footing that normally each component set should result in manufacture of one complete tin container for holding excess tin production to the tune of 28,284 tins worked out by the AO. The Tribunal enters into an elaborate exercise on the presumption that weight of each set would be 1,000 gms. Applying the same reasoning the Tribunal also reverses the partial reduction granted by CIT(A). The only relief that the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e are possibilities of injuring the persons involved. This way it is rather impossible to count and to take delivery. So the practice is to get them weighed and we maintain the record on every stage in terms of weight only. 20.1 It is an admitted position that in support of the aforesaid submission the assessee was called upon to adduce evidence and this has been done under cover of letter dt. 26th Feb., 1985. The assessee submitted the following evidences : 1. Certificate of Tin Containers Manufacturers Association. 2. Hand-operated Tin Containers Manufacturers Association. 3. Certificate of Taheri Tin Factory. 4. Certificate of Girishchandra Co. 5. Certificate of Indian Extraction (P) Ltd. 6. Certificate of Mahendra Oil Cake Industries (P) Ltd. 7. A chart in respect of details of tin plate and components showing the name of the seller, bill number, date, quantity, rate per ton, bill amount, factory Avak gate pass number, Avak gate pass date, weight bridge receipt number, weight bridge, weight broker name . 8. Copies of bills of brokers. 9. Certificates in the form of letters and bills from the brokers namely, Motichand Co. and Dalal Jayantilal Dayalal. We also rely upon the evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nother, viz., the purchase invoice as against the statement and supporting evidence. However, it is unfortunate that the Tribunal has not even cared to discuss the evidence which is relevant and has material bearing on the controversy. At the cost of repetition, it is required to be stated that the Tribunal has brushed aside the said evidence by stating that the same was tendered at a later stage during assessment proceeding without appreciating that it was only when the assessee was called upon to prove its stand that the necessity arose to produce evidence in support of its explanation. 23. The AO also examined one Shri Nalin Sampatlal Mehta, supervisor of another supplier, and the statement including cross-examination of the said gentleman is available on record. It is not necessary to repeat the gist of the said statement. Suffice it to state that the said statement when read as a whole supports the plea of the assessee. 24. As the record reveals : the assessee also produced (i) the weighment slips of the goods when they were sent for manufacture, (ii) weighment slips when the manufactured goods were received back by the assessee, (iii) gate passes which were issued at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d one which deserves to be rejected, the Department can reject and draw the inference that the amount represents income either from the source already disclosed by the assessee or from some undisclosed source. It is further stated that : The very words 'an undisclosed source' show that the disclosure must come from the assessee and not from the Department. In cases of high denomination notes, where the business and the state of accounts and dealings of the assessee justify a reasonable inference that he might have for convenience kept the whole or a part of a particular sum in high denomination notes, the assessee prima facie discharges his initial burden when he proves the balance and that it might reasonably have been kept in high denomination notes. Before the Department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The Department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof. It is within the range of these principles that such cases have to be decided . (emphasis, italicised in print, sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s becomes all the more material when one bears in mind that the assessing authority has categorically found that such alleged suppressed production of tins viz., 28,284 tins were not reflected in the closing stock. The question that the Tribunal was required to pose to itself was as to whether Revenue was justified in making addition on such count especially when Tribunal itself had recorded in no uncertain terms that there was no production of undisclosed oil and oil-cakes. The Tribunal having failed to address itself in this regard would go to show as an additional factor that the explanation tendered by the assessee was not unreasonable, was not fanciful and was duly supported by evidence and material on record and the Tribunal failed to not only appreciate but even consider the said evidence. 29. It is necessary to record that the assessee had made a specific grievance before CIT(A) to the effect that though statement of the concerned person of M/s Girishchandra Co. had been recorded by the assessing authority, despite a specific request, no opportunity to cross-examine the said party was offered, and to the contrary the assessing authority had relied upon the said statement. T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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