TMI Blog1993 (12) TMI 26X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer in the course of the assessment of the assessee for the assessment year 1986-87 to a conclusion that the purchases shown by the assessee in the books of account during the year of account were inflated and bogus purchases were debited to suppress profits. The assessee was called upon to prove the genuineness of the purchases. The Assessing Officer also issued notices to various parties who had purportedly sold goods to the assessee. Of them Imperial Oil Co., and Bengal Enterprises were the main parties. One Shri Ram Sevak Sukla appeared on behalf of Imperial Oil Co., as its sole proprietor and confessed in effect that the sales alleged to have been made by him to the assessee were not genuine and that the sales were bogus transactions. He was paid a sum of Rs. 15 per drum of oil for fabricating such sales, Thus, the Income-tax Officer concluded that the assessee has inflated the purchases and reduced the profit from oil business. The gross profit of Rs. 1,41,610 disclosed by the assessee in the books on a turnover of Rs.26,78,388 was disbelieved. The Officer rejected the book results and estimated the gross profit at 30 per cent. of the turnover as against the rate of gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reliable evidence as Shri Sukla is supposed to have obliged the assessee by making the affidavit. Emphasis was laid on the deposition of Shri Sukla, proprietor of Imperial Oil Co., denying having made the sales to the assessee. He was unambiguous in the confession that he issued challans so as to make the fictitious transactions look real. As for the cheques, his statement was that he no doubt received the cheques from the assessee but these issued cheques are also a subterfuge because the proceeds of the cheques immediately on encashment by Shri Sukla went back to the assessee. For the purpose of the repatriation of the money for which the account payee cheques were issued, the assessee, according to the state ment of Shri Sukla, got signed blank cheques from Shri Sukla drawn on his bank account. Thus, the amount of cheque was recouped by the assessee. According to Shri Sukla, he received as remuneration for being a party to such fabrication of transaction Rs. 15 per drum of oil. After this state ment of Shri Sukla, there cannot be any doubt as to the bogus nature of the assessee's book results and it legitimately called for rejection. It is pointed out by learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,758 for the previous year being the financial year ending March 31, 1987, relevant to the assessment year 1987-88, resulting in a gross profit rate of 6.42 per cent. It is, thus, urged that the comparative instance clearly rules out the scope for rejection of the book results of the assessee and even if the book results are rejected, the gross profit rate could not call for any interference. Shir Poddar further stressed the fact that the purchases by the assessee were fully vouched for and were genuine. As a matter of fact, the books of account lying seized in the course of search corroborate the book results. The seized documents clearly showed that the assessee firm did purchase from various parties, including Imperial Oil Co. He also mentioned that the income-tax authorities, in fact, failed to discover any incriminating documents falsifying the assessee's accounts and that is the reason why the assessee's suppliers were called upon to testify before him but the said supplier, Shri R.S.Sukla, was examined behind the back of the assessee and the assessee was not given an opportunity of cross-examining him. Even a copy of the statement was not supplied to the assessee. Thus, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sukla in his earlier state ments had described his sales as genuine and again the same was also corroborated by an affidavit affirmed by him. We have considered the contesting contentions of the parties. It is true that Shri Sukla has proved to be a shifty person as a witness. At the earlier stages, he claimed all his sales to be genuine but before the Assessing Officer in the case of the assessee, he disowned the sales specifically made to the assessee. This statement can at the worst show that Shri Sukla is not a trustworthy witness and little value can be attached to what he stated either in his affidavits or in his examination by the Assessing Officer. His conduct neutralises his value as a witness. A man indulging in double speaking cannot be said by any means a truthful man at any stage and no court can decide on which occasion he was truthful. If Shri Sukla is neutralised as a witness what remains is the accounts, vouchers, challans, bank accounts, etc. But, we would observe here that which way lies the truth in Shri Sukla's depositions, could have been revealed only if he was subjected to a cross-examination by the assessee. As a matter of fact, the right to cross-examine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la and Co. v. CST [1977] 40 STC 544. It is trite law that cross-examination is the sine qua non of due process of taking evidence and no adverse inference can be drawn against a party unless the party is put on notice of the case made out against him. He must be supplied the contents of all such evidence, both oral and documentary, so that he can prepare to meet the case against him. This necessarily also postulates that he should cross-examine the witness hostile to him. In any case, we have nothing to rely upon to come to a decision this way or the other. The first thing is that which of the statements of Shri Sukla is correct, is anybody's guess. Therefore, it is necessary to delve out the truth from him and for that matter a cross-examination is necessary. Secondly, if the statement of Shri Sukla as a witness against the adverse party, the assessee, is relied upon as truthful, still remains the question of estimation of the profit. The assessee no doubt has given a comparative instance of gross profit rate but it is also necessary for the Department to come to a finding as to the norm of the gross profit on the basis of comparative cases. Therefore, it is the duty of the Asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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