TMI Blog2016 (10) TMI 785X X X X Extracts X X X X X X X X Extracts X X X X ..... ined and as a whole cannot be relied upon or held worthy of confidence. The difference itself was of only 0.67 per cent. This, in the opinion of the Court, did not form sufficient ground to come to a conclusion that the books maintained by the assessee were not worthy of credence or that the transactions were not faithfully or dutifully recorded in the account books. Pausing here, it becomes relevant to clarify that this Court does not intend to lay down as a broad proposition that a singular transaction cannot in all situations be sufficient to reject the books of account. There may be a case where the singular discrepancy may be of such vital import that it cannot be brushed aside or ignored. What would have to be necessarily be borne in mind is the significance of the infraction and whether the same is indicative or evidence of a deliberate attempt to suppress and conceal turnover. Estimation of turnover - the Court finds that although the Tribunal accepts the submission of the revisionist that all the thirty eight machines were not functioning in May 2008, it has proceeded to estimate the escaped turnover to be ₹ 1,40,00,000/-. On what basis this figure has been arr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te are as follows: The assessee is stated to be a partnership firm which is engaged in the business of manufacture and sale of Gutkha. It is stated to have commenced its manufacturing operations on or about May 2008. For the relevant assessment year the requisite declaration in respect of purchases and sales were made. The business premises of the assessee are said to have been surveyed on 5 May 2008 and 12 August 2008 and it is the material gathered during the course of the survey so undertaken which formed the bedrock of the proceedings subsequently taken by the assessing authority. From a reading of the order of the Tribunal the following facts emerge. During the course of the survey undertaken, it was found that the difference in the quantity of raw material as actually found and duly recorded, was of 227.24 Kgs. Similarly, in respect of the finished product the survey team noted that the quantity thereof was shown as 1596.795 Kgs whereas the actual quantity of finished product was found to be 4417 Kgs. It is not disputed (and this fact is so recorded even by the Tribunal) that the relevant books of account and other records were produced for the inspection of the survey tea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax already paid on goods which have been utilized in the manufacture of the final product. Assailing the estimation of escaped turnover, Sri Agarwal submits that the case of the revisionist was that all the thirty eight machines which were found installed in the business premises were not working at the time of survey. They were under repair and maintenance. Despite the above, Sri Agarwal submits, the escaped turnover has been worked out on the basis as if all the machines were functioning at the relevant time. He further submits that the unit of the assessee had commenced operations only in 2008 and therefore this was also a factor which should have weighed with the respondents while estimating escaped turnover. He has drawn the attention of the Court to the fact that although the Tribunal does accept the explanation of the assessee that the thirty eight machines were not actually functioning at the time of survey, it has not given any benefit to the assessee on this score. He lastly submits that although the Tribunal has reduced the escaped turnover as assessed by the assessing authority, even this estimation of the Tribunal is not based on any empirical exercise nor is it refer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the RG-1 Register did not match with what was actually found during the course of the survey operations. While dwelling upon the significance of these discrepancies, it was incumbent upon the assessing authority to come to a conclusion that the discrepancies themselves were sufficient to warrant the formation of an opinion that the books of accounts and records were not being faithfully maintained by the assessee. The other aspect which should have necessarily fallen for consideration of the assessing authority was whether the explanation so proffered by the assessee was reasonable and plausible or of a nature or character which was not worthy of consideration at all. In the facts of the present case, the Court finds that the difference in the recorded quantity of raw material and what was actually found by the survey team on the date of inspection was a minuscule 0.67 per cent. Similarly, insofar as the quantity of finished product which was found by the survey team as not matching with what was recorded in the RG-1 Register is concerned, the same was duly explained by the assessee who had submitted that the survey team had proceeded to add the quantity of finished product whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le cannot be relied upon or held worthy of confidence. It is trite to note that the rejection of books of account has serious consequences insofar as the assessee is concerned. It cannot be resorted to based upon a singular instance of insignificant character. It must be based upon the authority coming across a course of conduct evident of suppression and deliberate concealment. It surely cannot be a measure adopted in the face of a minuscule discrepancy which may be noted. This aspect gains significance in the backdrop of the present case where the difference itself was of only 0.67 per cent. This, in the opinion of the Court, did not form sufficient ground to come to a conclusion that the books maintained by the assessee were not worthy of credence or that the transactions were not faithfully or dutifully recorded in the account books. Pausing here, it becomes relevant to clarify that this Court does not intend to lay down as a broad proposition that a singular transaction cannot in all situations be sufficient to reject the books of account. There may be a case where the singular discrepancy may be of such vital import that it cannot be brushed aside or ignored. What would ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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