TMI Blog2001 (7) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... at the business premises of the assessee-firm and seized various articles. According to the Income-tax Officer, the most important item in the seized material was item No. 9 which consisted of five books. The said five books were serially numbered as 9/1, 9/2, 9/3, 9/4 and 9/5. It is further recorded in the assessment order that out of these five books on examination it was observed that the first three diaries bearing Nos. 9/1, 9/2 and 9/3 pertained to S.Y. 2027 while the remaining two diaries pertained to S. Y. 2028, i.e, the year under consideration. In light of these observations recorded by the Income-tax Officer in the assessment order he has stated thus in para. 2: "2. In the immediate preceding year the case of the assessee has been narrated at length giving full particulars of the various activities of the assessee. The facts for the year are similar to that of earlier year. However, even at the cost of repetition some of the facts are reproduced here. " Accordingly, the assessment was framed on a total income of Rs.60,214, wherein the Income-tax Officer added Rs.20,000 towards concealed capital and Rs.13,000 as being probable profit at five per cent. on estimated s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der of the Income-tax Officer and the Appellate Assistant Commissioner stated that there was no dispute that there was difference of more than 20 per cent. between the returned income and the assessed income and, hence, the first limb of the Explanation to section 271(1)(c) of the Act was attracted. The Tribunal further observed that in light of the Explanation levy of penalty by the authorities was fully justified. While dealing with the contention raised on behalf of the assessee that the order of the Income-tax Officer was based on the same point for the earlier year and that the Tribunal had in its order relating to the assessment year 197273 cancelled the penalty as imposed by the Inspecting Assistant Commissioner and hence on the same parity of reasoning penalty for the year under consideration was not justified, held that the facts were somewhat different. Elaborating on this aspect of the matter, the Tribunal has further stated that in the preceding year, i.e., assessment year 1972-73, the Income-tax Officer had made addition in respect of suppressed purchases which was substituted by the Tribunal by making addition for unexplained investment and estimated profits, while fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y presumption arose to the effect that the assessee had concealed its particulars of income or furnished inaccurate particulars and such a presumption could be rebutted only if the assessee could show that the difference in question had not arisen due to either fraud or gross or wilful neglect on the part of the asses-see in returning the correct income. It was further pointed out from the Tribunal's order that the Tribunal had categorically held that as a matter of fact the clandestine activity of purchase and sale of groundnut oil had been established, that therefore, the assessee's explanation had not been accepted by the Tribunal and in the light of these findings recorded by the Tribunal it was not open for this court to take any other view of the matter. In support of his case, the decisions of this court in the case of CIT v. Somnath Oil Mills [1995] 214 ITR 32 and in the case of CIT v. Jamnadas and Co. [1994] 210 ITR 218 were pressed into service. The settled legal position is that the Explanation to section 271(1)(c) of the Act provides for raising a presumption against the assessee in a case where the total income returned by any person is less than 80 per cent. of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is held that in view of the purchases of tin, etc., involved in these transactions the unaccounted total purchases could be roughly estimated at Rs.2,10,000. The Income-tax Officer further goes on to hold that such concealed purchases of Rs.2,10,000 would roughly involve sales as well to the extent of Rs.2,60,000. Adopting the ratio of 1 : 13 in relation to the accounted purchases, capital to the tune of Rs.20,000 has been worked out as being required for making unaccounted purchases. A rate of 5 per cent. net profit on sales of Rs.2,60,000 has been applied and a further addition of Rs.13,000 has been made as being estimated profit on the sales outside the books. From the aforesaid findings recorded by the Assessing Officer, we find that the Income-tax Officer has made estimates in three stages which tantamounts to rewriting seized material. After working out the unaccounted purchases of Rs.1,74,475 an estimate of 10 per cent. thereof has been made in the first stage for similar unaccounted purchases ; thereafter this figure has further been enhanced by estimating unaccounted purchases on account of tins, etc., and thereafter the rough estimated figure has been rounded off up to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ychand Harilal [1979] 120 ITR 752 held that in relation to addition of estimated profit that: "it may be stated that we have not gone into the question as to whether the Tribunal had changed the base as we are of the view that even otherwise also, the order of the Tribunal deserves to be sustained in view of the decision of this court in Vinaychand Harilal's case [1979] 120 ITR 752". In so far as the two decisions of this court, on which the reliance was placed on behalf of the Revenue, are concerned, we find that in the decision in the case of Somnath Oil Mills [1995] 214 ITR 32 (Guj), the court was not called upon to deal with the fact situation where the Explanation was invoked against the assessee and moreover in the said case the entire unrecorded purchases had been added by the Income-tax Officer as against which the Appellate Assistant Commissioner had sustained the addition in relation to extent of Rs.35,220 and the other issue was regarding deduction of sales tax liability in relation to unaccounted purchases, viz., whether such a liability was deductible or not. As can be seen from the reported decision the finding of the Tribunal was to the effect that the sales discl ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
