TMI Blog1993 (12) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... bidis). The assessee also sold in the market certain bidis known as chhat bidis. Separate books of account for each of these branches were kept by the assessee. The bidis manufactured in the village factories were sent to each of the respective branches which had supplied them with raw material for the manufacture of bidis. All the profits of the assessee were accounted for in the account books of the assessee at its head office at Sinnar. During the year, the assessee had employed thousands of workmen in its different factories. This industry does not require any machinery but depends entirely on human labour for the manufacture of bidis. The workmen were paid on the basis of the work done at the rate of 1,000 bidis prepared. The raw material required by the workers for rolling the bidis are bidi leaves, tobacco and thread. For checking the bidis rolled by the workers, the assessee employs checkers who are known as taraiwallas. The taraiwallas distribute raw materials to the workers and make rounds for checking the bidis being rolled. The taraiwallas take out bidis in the process of rolling which, in their opinion, are not of the standard quality. These sub-standard bidis a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of these leaves at Rs. 28,20,147 as against Rs. 32,74,982 claimed by the assessee. The Income-tax Officer, therefore, concluded that the assessee had inflated the cost of consumption of bidi leaves by Rs. 4,55,000 approximately, which the Income-tax Officer added to the assessee's total income. The Income-tax Officer further held that the assessee had suppressed the production of bidis, inter alia, by not adding to the production figures of mapari bidis which he estimated as ten bidis from each worker per day. He estimated the average production of a workman per day as 700 bidis and, therefore, arrived at the figure of 13 mapari bidis for every thousand bidis. He also added gundichi bidis (with which we are not now concerned) and arrived at the total mapari and gundichi bidis collectively which according to him were not accounted for ; and he added Rs. 3,20,000 under this head, i.e., suppressed production. He also added Rs. 1,64,000 as suppressed production of chhat bidis. He calculated chhat bidis at the rate of 20 chhat bidis per 1,000 bidis for this purpose. He also added certain other types of bidis and estimated the total figure of suppressed production at Rs. 8,74,000. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1.03 per kg. came to Rs. 2,31,310. The Tribunal, however, said that taking all the circumstances into account and after giving all possible benefits to the assessee, it will be reasonable to add only Rs. 1,00,000 to the income of the assessee in respect of the excess consumption of bidi leaves shown by the assessee. In other words, as against the addition under this head made by the Income-tax Officer of Rs. 4,55,000 which was deleted by the Appellate Assistant Commissioner, the Tribunal maintained the addition of Rs. 1,00,000. The Tribunal next considered the question of suppressed production of various types of wage-free bidis collected by the assessee. In the present case, we are concerned only with chhat and mapari bidis. The Tribunal came to the conclusion that the assessee collected an estimated 15 chhat bidis per day per worker. But since only 800 bidis were rolled per day per worker, the chhat bidis per thousand bidis would come to 18 in number. The Tribunal also took into consideration evidence relating to free chhat bidis given to workers or being used for free advertisement and deducted from this figure of 18 chhat bidis per thousand, 3 bidis. It held that 15 chhat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, suspicion and conjectures and was contrary to the material on record ?" On the first question there is no serious dispute that the Tribunal was right in holding that the Income-tax Officer had correctly applied section 145(2) of the Income-tax Act, 1961, for the assessee's assessment for the assessment year 1964-65. In view of reasons which have been given by the Income-tax Officer which we have set out earlier, there is no doubt that the assessee had not produced the relevant record as pointed out by the Income-tax Officer relating to its day-to-day manufacture of bidis including the quantity of bidis manufactured daily, the figures of bidi leaves consumed per day in each factory and the record relating to the daily collection of chhat and mapari bidis. The Tribunal has correctly held that in this situation, the Income-tax Officer was not satisfied about the fairness or correctness of the accounts of the assessee and that the Income-tax Officer was entitled to make an assessment in the manner provided in section 144. Question No. 1 must, therefore, be answered in the affirmative and in favour of the Revenue. The second question relates to the addition of amounts set out ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er daily. The figures fluctuate considerably. The witnesses on behalf of the assessee have given higher figures of consumption of bidi leaves per thousand bidis than the workers examined by the Income-tax Officer. The Appellate Assistant Commissioner seems to have estimated the consumption of bidi leaves at 1 seer 3 chataks of bidi leaves for a thousand bidis. For this, he seems to have relied on one register which was produced by the assessee relating to daily production in one of the factories. According to the assessee, all the other registers from its various factories were not available because they were either destroyed or eaten by rats or burnt. The explanation of the assessee has rightly not found favour with the Appellate Assistant Commissioner. However, the only material in Support of taking the figure of 1 seer and 3 chataks for 1,000 bidis is this single register produced by the assessee. The Appellate Assistant Commissioner has, however, observed that when out of thousands of workers employed only a few striking workers are examined, their evidence does not inspire. confidence. Similarly, when out of thousands of daily registers only one is produced, that register also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worker on the basis of the evidence of workers examined by the Income-tax Officer as well as by the assessee which was before it. It is true that the Tribunal has observed in its order that the evidence of these witnesses was recorded for the assessment year 1963-64 and, therefore, it could not be considered for the assessment year 1964-65. Nevertheless, the Tribunal has in fact, looked at this evidence and recorded its alternate finding after considering this evidence also. Therefore, on the basis of the material before the Tribunal, it has held that on an average 15 chhat bidis per day per worker were being taken by the assessee. Since this is an order under section 145(2) read with section 144 of the Income-tax Act, 1961, we do not see any reason to interfere with the reasoning of the Tribunal since it cannot be said that the Tribunal had no material before it for arriving at its conclusion. The assessee has contended before us that we should take the average of various figures given by the various witnesses. We do not see why this should be done or why this alone can be considered as giving the correct estimate. Similarly, the Tribunal has estimated that each worker rolled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... da, in which he has stated : "Mapari and chhat bidis are never supposed to be part of production because chhat is rejected bidi as sub-standard product while mapari bidi is meant for replacement of chhat." It is not at all clear from this statement whether mapari bidis were in fact included in the production figures of bidis. The statement that mapari bidis were taken in substitution of chhat is somewhat ambiguous. It is nobody's case that there was any co-relation between chhat bidis taken from each worker and mapari bidis taken from him. What is more important is that, the Tribunal has found as a fact that mapari bidis were not included in the production figures of the assessee. Therefore, the amount added under the head of suppressed production of mapari bidis cannot be reconsidered in this reference application. In the premises, in our view, it cannot be said that there was no material before the Tribunal for making the additions as alleged or that the Tribunal's conclusions were based on mere suppositions or conjectures as far as mapari and chhat bidis are concerned. Accordingly, we answer question No. 2 as follows : The Tribunal's conclusion directing the addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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