TMI Blog2001 (3) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... not be treated as the assessee's income from undisclosed sources?" The dispute relates to the assessment year 1971-72. The factual position as noticed by the Tribunal is as follows. The assessee was a manufacturer of allopathic medicines, the most famous being Equibrom which was used as a tranquilliser. It claimed to have purchased raw material worth Rs. 3,82,750 from Kalpana Enterprises, 71, Canning Street, Calcutta, on credit. Two purchases, i.e., one for Rs. 1,83,750 and the other for Rs. 2 lakhs, were claimed to have been made. The Income-tax Officer found that the rate at which the purchases were made was high. He -also found that these were the only purchases from the alleged seller. On that ground he asked the assessee to produce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, i.e., 71, Canning Street, Calcutta. The Income-tax Officer issued summons to the agent of Indian Overseas Bank, Janpath, New Delhi, through whom the payment was made to Kalpana Enterprises on March 24, 1973. The agent informed on March 13, 1974, that the account of Kalpana Enterprises was opened with them on March 24, 1973, with four pay orders, three of Rs. 1 lakh each and the fourth for Rs. 82,750. The address furnished by Kalpana Enterprises was 479, Bartan Market, Sadar Bazar, Delhi. The name of the person who was operating the bank account was Chedi Lal. One Satya Pal Jain, partner of Medipac, one of the sister concerns of the assessee-firm had introduced Chedi Lal to the bankers. The amount in question was withdrawn by Chedi Lal. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of Rs. 3,82,750 as the assessee's income from undisclosed sources. The matter was carried in appeal before the Appellate Assistant Commissioner of Income-tax (in short "the AAC"). The said authority was of the view that though the circumstances were not very clear yet the fact remained that the goods had been pledged with the bank after the alleged purchase. Therefore, no adverse inference could be drawn. It was also concluded that though Chedi Lal and Satya Pal Jain were not produced and that Satya Pal Jain had introduced Chedi Lal, that cannot be a basis for doubting the genuineness of the purchases and/or to infer that there were fictitious purchases. The matter was carried in appeal by the Revenue before the Tribunal. The stand of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as indicated above, on being moved under section 256(2) of the Act, the question as set out above has been referred. We have heard learned counsel for the Revenue. There is no appearance on behalf of the assessee in spite of notice. Though essentially the conclusions of the Tribunal have the colour of factual findings, still we find that the Tribunal has not taken into consideration relevant materials and has also acted on irrelevant materials. The fact that the alleged sellers have been found to be persons with no means to effect purchases or to carry on business is a factor which does not appear to have been considered by the Tribunal in its proper perspective. The materials on record clearly establish that Chedi Lal was a petty employe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplies were not made by Kalpana Enterprises to whom payments were alleged to have been made, the question whether the purchases were made from some other source ought not to have weighed with the Tribunal as a factor in favour of the assessee. The conclusions of the Tribunal are, therefore. clearly erroneous. contrary to the materials on record and have been arrived at without taking into consideration relevant material and placing reliance on irrelevant materials. It is to be noted that the assessee's stand was not that it had effected purchases from anybody else. Its stand throughout was that it had effected purchases from Kalpana Enterprises. It was not open to the Tribunal to make out a third case, which was not even the case of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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