TMI Blog2002 (12) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... income on account of various credits recorded in the diary maintained by Maltiben Rs. 2,27,000 (7) Unaccounted sale of scrap Rs. 3,79,700 (8) Unaccounted income due to forfeiture of advance money received from M/s Mahendra Suitings Rs. 36,975 -------------- Rs.1,05,18,882 -------------- 2. The assessee firm derives income from manufacture and sale of textile machinery. A search and seizure operation was carried out on 8-9-1995 at the residential premises of the partners of the firm viz., S/Shri Ashwin B. Patel and Naresh B. Patel. A survey operation under section 133A was also carried out at the business premises of the assessee firm as well as its sister concern viz., M/s B Brothers Machinery Mfg. Pvt. Ltd. The Authorised Officer recorded the statement of Shri Ashwin B. Patel-partner of the firm on 8-9-1995. Thereafter on receipt of intimation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis, the Assessing Officer estimated the under-invoicing in respect of fifteen parties to whom the sales were made by the assessee in the block period at Rs. 65,40,025 as per the working given at page 7 of the assessment order which is as under: --------------------------------------------------------------------------------------- Sr. Name of the Date of Invoice Price Actual Price Difference No. Party Sale before sales before ST/CST tax/Centrat Packing Ex. Packing Expenditure Expenditure (A) B=A*1.25 --------------------------------------------------------------------------------------- (1) (2) (3) (4) (5) (6) --------------------------------------------------------------------------------------- l. Shalu Dyeing 11-10-86 10,00,000 12,50,000 2,50,000 2. Advance Synthetics 26-3-87 12,91,000 16,13,750 3,22,750 3. Anjani Synthetics 27-11-90 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ------------------------------------ (1) (2) (3) (4) (5) (6) --------------------------------------------------------------------------------------- 1. Rajlaxmi Textiles 28-6-93 23,31,000 29,13,750 5,82,750 2. Dhanesli Textiles 31-5-93 2,40,000 3,00,000 60,000 3. Gurdayal Shyamlal(P)Ltd 21-4-93 3,21,000 4,01,250 80,250 4. Advance Svrithetics 24-3-90 5,11,000 6,38,750 1,27,750 31-3-90 90,000 1,12,560 22,500 5. Pavan Export 27-1-95 2,25,000 2,81,250 56,250 1-2-95 2,00,000 2,50,000 50,000 4-2-95 3,00,000 3,25,000 75,000 17-1-95 5,00,000 6,25,000 1,25,000 17-1-95 1,51,000 1,88,750 37,750 6. Ashok Fashion 31-8-95 2,50,000 3,12,500 62,500 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with the assessee as a Technical Executive from 11-11-1991 and subsequently as Sales Marketing Executive for the last one year prior to the date of search. Accordingly, it was pleaded that how the sales effected by the assessee prior to this period could be known to him and as such the Assessing Officer was not justified in holding that the assessee has under-invoiced the sales effected by the assessee to all the parties mentioned in the assessment order at a uniform rate of 20 per cent. It was pleaded that the Assessing Officer has not been able to find from the purchasers as to whether they have paid any extra cash money over and above the invoiced price charged by the assessee from the prospective purchasers. It was submitted that the Assessing Officer has not brought any material or evidence on record except the statement of Shri H.A. Patel to allege that the extra sale price in cash was received by the assessee from all those parties mentioned in paras 7 and 9 above. 13.1 As regard the addition made on account of alleged discrepancy in stock, it was submitted that the assessee has given detailed working in its letter dated 16-10-1995 pointing out the mistakes/corrections ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e it was submitted that it cannot be said to be undisclosed income of the assessee as the advance was duly recorded in the books of account. He accordingly submitted that the computation of undisclosed income by the Assessing Officer at an exorbitant figure of Rs. 1,05,18,882 is not at all justified in the facts and circumstances of the case. 14. The learned DR strongly relied on the order of the Assessing Officer and further submitted that it is undisputed and is quite clear from the admission of Shri Ashwin B. Patel during the course of search that the assessee firm has received cash amounting to Rs. 9,77,000 over and above the invoiced price in relation to the four parties mentioned in para 4 above on account of under-invoicing of sale bills. Accordingly, it was pleaded that based on law of probability the assessee must also have under-invoiced the sale price in respect of machineries sold and mentioned in paras 7 and 9 above and as such the Assessing Officer was fully justified in making the additions on account of under-invoicing of sale price in respect of all the machines mentioned in the assessment order. It was pleaded that Shri H.A. Patel--Technical Executive of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The learned AR of the assessee has furnished correspondence entered into between the Assessing Officer and those parties noted in paras 7 and 9 of this order above (except the four parties in respect of which "on money" receipts of Rs. 9,77,000 were admitted by the assessee and confirmed by the purchasers of machines) wherein the Assessing Officer called for information under section 133(6) from those parties and those parties have replied to the Assessing Officer stating that they have only paid the considerations for purchases made as noted in the invoice. All these put-chasers are assessed to tax. The relevant correspondence has been furnished to us at pages 1 to 77 of the paper book. The Assessing Officer has not brought any material on record (except the statement of Shri H.A. Patel--so called Technical Executive that the assessee was charging "on money" varying from 10 per cent to 30 per cent in respect of the machines sold by it) to indicate that the assessee has in the fact received any "on money" in respect of the transactions of sale of machineries to these parties as noted by us in paras 7 and 9 of this order above. Chapter XIV-B deals with a special procedure for the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y party was Rs. 37.56 lakhs, there was an apparent shortage of Rs. 7.43 lakhs in the valuation of stock. The contention of the assessee before us was that there was no such discrepancy as alleged by the Assessing Officer because the assessee was following Cardex System regularly and consistently from year to year and the valuation of stock as per the working given by the Assessing Officer at pages 100 to 101 of the paper book comes to Rs. 40,45,968. This valuation included the stock valuing Rs. 1,55,000 given by the assessee to three outside parties viz. Lathia Rubber (P.) Ltd., M/s. Western Engg., and M/s Mukta Rubber noted by the Assessing Officer at page 10 of the assessment order but for which credit was not given by him while making the addition. The Assessing Officer however reduced the amount of Rs. 1,04,000 on account of alleged unaccounted stock considered in the hands of sister concern M/s Babros Machinery Mfg. (P.) Ltd. and accordingly made an addition of Rs. 6,39,000. However, even if we accept the working of the assessee as given at pages 100 and 101 of the paper book, the stock as per that working comes to Rs. 40,45,968 (which include Rs. 1,55,000 given by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pported by the decision of the Ahmedabad Bench of the Tribunal in the case of Ruby Builders. Accordingly, the addition of Rs. 13,59,000 on account of alleged unaccounted purchase of material is directed to be deleted. 18. Ground of appeal No. (6) relates to the addition made on account of unaccounted income represented by various credits entered into the diary maintained by Smt. Maltiben-partner. The Assessing Officer has discussed this issue in para 4 at pages 16 and 17 of the assessment order. The assessee has furnished zerox copies of the diary at pages 146 to 155 of the paper book. The facts relating to this addition are that Smt. Maltiben used to make record of various amounts received by her from her husband Shri Naresh B. Patel and her brother-in-law Shri Ashwin B. Patel. She has also recorded various payments made to different parties. Out of the various credits found in the diary the Assessing Officer has made an addition in respect of the following items: (1) Opening Balance Rs. 1,45,000 (2) Received back from Shri Manubhai Rs. 20,000 6-4-1993 (3) Received back from Shri Thakorbhai Rs. 2,000 2-2-1993 (4) Receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iaries maintained by the two partners copies of which have been given to us at pages 140 to 145 and 156 to 159 of the paper book. A perusal of these pages indicates that there is overlapping of receipts on account of sale of Lochru in both the diaries. For example, in the diary maintained by Shri Naresh B. Patel, at page 143 at item No. 3 Rs. 15,000 on 26-7-1993 has been recorded as Lochru receipt. The same amount has been recorded by Shri Ashwin B. Patel in his diary at page 158 and the assessee has also given explanation before the Assessing Officer vide his letter dated 24-12-1998 at page 134 of the paper book. Therefore, taking into consideration the totality of the facts and circumstances of the case, we are of the opinion that it will be fair and reasonable to restrict the addition on account of unaccounted sale of scrap/Lochru at Rs. 2,00,000 for the entire block period. This ground of appeal is partly allowed. 20. Coming to the last ground relating to forfeiture of advance given by M/s Mahendra Suitings to the assessee for purchase of machinery, it is seen that the same is duly recorded in the books of account and has been offered by the assessee as its income in the subs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achinery. A search and seizure operation was carried out on 8-9-1995 at the residential premises of the partners of the firm viz., S/Shri Ashwin B. Patel and Naresh B. Patel. A survey operation under section 133A was also carried out at the business premises of the assessee firm as well as its sister concern viz., M/s B Brothers Machinery Mfg. Pvt. Ltd. The Authorised Officer recorded the statement of Shri Ashwin B. Patel--partner of the firm on 8-9-1995. Thereafter on receipt of intimation from the Jt. CIT, Special Range 4, Ahmedabad who held jurisdiction over the case of the partners, the Assessing Officer having jurisdiction over the case of the assessee firm, issued notice under section 158BD on the assessee requiring it to file the return for the Block Period 1-4-1985 to 8-9-1995. In response to the said notice, the assessee firm filed the return for the Block Period on 18-4-1998 declaring total undisclosed income at Rs. NIL. 4. The Assessing Officer took up the assessment proceedings and on the basis of statement of Shri Ashwin B. Patel-partner and also that of Shri H.A. Patel--Technical Executive of the assessee firm, the Assessing Officer concluded that the assessee fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above, the Assessing Officer found that the corroborative evidence in the form of cash received from the above parties was recorded in the various loose papers seized/impounded from the residence of the partners of the firm --------------------------------------------------------------- Referred loose papers Nature of description/ transaction written on the loose paper --------------------------------------------------------------- Page No. 121 seized from Rs. 2,77,000 received the residence of Ashwin from M/s Anjani Synthetics B. Patel Naresh B. Patel inventorised at Sr. No. 10 of Annexure A-1. Page 155 seized from the Rs. 3,00,000 received residence of A. B. Patel from M/s York Fashion/ N.B. Patel inventorised at York Fabrics Sr. No. 10 of Annexure A-1 Diary seized from residence Received Rs. 2 lakh of N.B. Patel written in the from M/s Dayaram Ptg. handwriting of Mrs. Mattiben Dyeing Mills on w/o of N.B. Patel 27-1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Stenter + 3BPM 4. 29-11-93 Dayaram Ptg. 5 Ch. Pin Clip 21,80,122 94-95 Dyeing Mills Stenter + 3BPM -------------------------------------------------------------------------- 12. The assessee vide letter dated 21-12-1998 was required to show cause as to why total cash receipt of Rs. 9.77 lakh shall not be treated as unaccounted income/concealed income on- account of under-invoicing of sale bills to following parties for supply of Stenter machines: Name of the party Amount M/s Anjani Synthetics Rs. 2,77,000 M/s Shalu Dyeing Ptg. Mills Rs. 2,00,000 M/s York Fabrics/York Fashion Rs. 3,00,000 M/s Dayaram Dyeing Ptg. Mills Rs. 2,00,000 ------------ Total Rs. 9,77,000 ------------ 13. In response to the letter dated 21-12-1998 mentioned above, the assessee submitted that he did not receive Rs. 3 lakh from York Fashion, but statement under section 133A was made by him without knowledge about the actual transaction. The assessee further sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tics at a basic billed price of Rs. 20,00,000. This kind of variation in the billed price in respect of similar machines without any reasonable cause was found in all other transactions. Regarding the variation in the billed price of similar machines, the assessee could not give any plausible explanation. 14.1 As discussed above in preceding para, Shri H.A. Patel, Technical Executive stated that 10 per cent to 30 per cent of sale price was taken in cash and balance is taken by cheques. 15. In the course of search action in response to question Nos. 46, 47 and 48 of the statement recorded on 9-9-1995 the assessee had categorically stated that he had received the cash in respect of the number of parties in addition to the four parties in which specific quantum of concealment was admitted by him. The Assessing Officer observed that the assessee did not give the quantum of concealment in respect of other parties only to avoid payment of tax in respect of concealed income during the entire block period, Taking into consideration the statement of Shri H.A. Patel, Technical Executive of the firm and the statement of Shri Ashwin B. Patel as discussed above and also other corroborative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 29-11-93 19,73,264 24,66,580 4,93,316 14. Paras Fab. International 18-5-94 14,61,000 18,26,250 3,65,250 15. Chamunda Textile 13-5-95 20,25,000 25,31,250 5,06,250 --------- Total 65,40,025 --------------------------------------------------------------------------------------- 16.1 Out of the above, the assessee has already admitted concealment of Rs. 9,77,000 in respect of parties listed at Sr. Nos. 1, 3, 10 and 13 as stated above and the same was added to the total income of the assessee vide para 1.5 of the assessment order. Therefore, additional concealment of Rs. 55,63,025 (Rs. 65,40,025 - Rs. 9,77,000) was added to the total income of the assessee due to under-invoicing of sales in respect of 15 parties as stated above in addition to Rs. 9,77,000 added separately. 17. The Assessing Officer also observed the concealment on account of under-invoicing of sales of machinery by the assessee other than the Stenter machines. The Assessing Officer observed in paras ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) (4) (5) (6) --------------------------------------------------------------------------------------- 1. Rajlaxmi Textiles 28-6-93 23,31,000 29,13,750 5,82,750 2. Dhanesh Textiles 31-5-93 2,40,000 3,00,000 60,000 3. Gurdayal Shyamlal(P)Ltd. 21-4-93 3,21,000 4,01,250 80,250 4. Advance Synthetics 24-3-90 5,11,000 6,38,750 1,27,750 31-3-90 90,000 1,12,500 22,500 5. Pavan Export 27-1-95 2,25,000 2,81,250 56,250 1-2-95 2,00,000 2,50,000 50,000 4-2-95 3,00,000 3,25,000 75,000 17-1-95 5,00,000 6,25,000 1,25,000 17-1-95 1,51,000 1,88,750 37,750 6. Ashok Fashion 31-8-90 2,50,000 3,12,500 62,500 31-8-90 2,28,930 2,86,162 37, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtra cash money over and above the invoiced price charged by the assessee from the prospective purchasers. The Assessing Officer has also not brought on record any material or evidence except the statement of Shri H.A. Patel to allege that the extra sale price in cash was received by the assessee from four parties mentioned above in preceding paras. The learned AR of the assessee relied on the decision in the case of NR. Paper Boards Ltd. 19. On the other hand, the learned DR still relied on the order of the Assessing Officer and further submitted that it is undisputed and quite clear from the admission of Shri Ashwin B. Patel that the assessee had received cash amounting to Rs. 9,77,000 over and above the invoiced price in relation to four parties mentioned above in para 1.6 on account of under invoicing of sale price. Accordingly it was pleaded that based on law of probabilities the assessee must also have under-invoiced the sale price in respect of machinery sold and mentioned in para above and as such the Assessing Officer was fully justified in making the addition on account of under-invoicing of sale price in respect of all machineries mentioned in the assessment order. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mrs. Maltiben wife of Shri N.B. Patel, the assessee received Rs. 2 lakhs from M/s Dayaram Printing Dyeing Mills on 27-12-1993. Further receipt of on money was corroborated by the statement of Shri H.A. Patel, Technical Executive whose statement was recorded under section 131 of the Act on 8-9-1995 at factory premises of B Bros. Engg. Works wherein he stated that as per proposal of the customers 10 to 30 per cent of the sale price of the machinery was taken in cash and balance by cheque which is decided by Shri Ashwinbhai B. Patel. He also stated that as per his knowledge it was decided in his presence to take cash from M/s York Fashion at Rs. 3 lakhs and with Dayaram Ptg. Dyeing Mills at Rs. 2 lakhs. Besides this, the Assessing Officer also found that in addition to the above under-invoicing, the assessee was found involved in doing wrong classification of machinery in bills mainly to justify low sale price in books of account which is clear from the fact that the assessee supplied 5 Chamber Stenter machines to M/s Dayaram Ptg. Dyeing Mills and the same were billed as 3 Stenter machines. In the said transactions, the assessee had admitted to have received Rs. 2 lakh from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncealment could not be given only to avoid payment of tax in respect of concealed income during the entire period. In this situation, taking into consideration the statement of Shii H.A. Patel, Technical Executive of the assessee firm and the statement of Shri Ashwin B. Patel as discussed above and other corroborative evidence discussed in para 1.1 to 1.6 of the assessment order, the Assessing Officer has rightly concluded that the assessee had taken cash over actual sale invoice at 20 per cent (i.e., average 10 per cent to 30 per cent) as admitted by Shri H.A. Patel in respect of sales of Stcntcimachines during the block period. Therefore, in my view, the additional concealment of Rs. 55,63,025 (65,40,025 - 9,77,000) has been correctly added as undisclosed income to the total income of the assessee. Hence ground No. (2) of assessee's appeal is rejected. 23. As regards unaccounted income due to under-invoicing of sale of machinery by the assessee other than Stenter machines, the Assessing Officer observed that the assessee himself admitted to have concealed income on account of under-invoicing of sale of machinery as discussed in para 1.6 of the assessment order; the Technical E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income referred to in ground numbers 2 and 3 are assessable as undisclosed income in assessment for Block Period under Chapter XIVB. 26. It may now be imperative to make a useful reference to the judgment of the Hon'ble Supreme Court in the case of H.M. Esufali, H.M. Abdulali to support the conclusion arrived at by the Assessing Officer and confirmed by me that receipt of on money can be validity estimated on the basis of few admitted specific instances of receipt of such on money on sale of four Stenter machines based on the aforesaid material/statements etc. discussed above. The Head Note of the aforesaid judgment of the Hon'ble Supreme Court is reproduced below: "Held, that the reassessments were valid. From the circumstances that the assessee had dealings outside the accounts of the value of Rs. 13,171.28 for 19 days, it was open to the officer to infer that the assessee had large-scale dealings outside the accounts. In such a situation, it was not possible for the officer to find out precisely the turnover suppressed and he could only make an estimate of the suppressed turnover on the basis of the material before him. So long as the estimate made by him was not arbitrary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer on account of under-invoicing of Stenter machines to the extent of Rs. 55,63,025 and under-invoicing of machines other than Stenter machines to the extent of Rs. 13,36,982 is required to be sustained on the basis of statement of Shri H.A. Patel, an employee called 'Technical Executive' with the assessee, that the assessee was charging "on money" varying from 10 pct cent to 30 per cent in respect of every machinery sold by it, is justified. ORDER UNDER SECTION 255(4) OF I.T. ACT, 1961 As there was difference of opinion between the two members who heard the appeal in IT(SS)A No. 2/'Ahd./1999 block period 1-4-1985 to 8-9-1995 in the case of M/s B Brothers Engineering Works v. The Deputy Commissioner of Income-tax, Hon'ble Accountant Member framed difference of opinion under section 255(4) of the I.T. Act, 1961. 1 find that all the points raised in my dissenting order have not been incorporated in the said difference of opinion framed by my esteemed colleague. So I have also framed difference of opinion under section 255(4) of the I.T. Act, 1961 in the case which is being forwarded herewith Sir, for further necessary action. ORDER UNDER SECTION 255(4) OF I.T. ACT, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that both of them have proposed separate questions as would be apparent from the reproduction herein under but in as much as these pertain to two additions made by the Assessing Officer in the course of the block assessment, I need not say anything more: QUESTIONS PROPOSED BY THE ACCOUNTANT MEMBER Q. Whether in the facts and circumstances of the case, the view of the Accountant Member that no addition on account of alleged undisclosed income due to alleged under-invoicing of Stenter machinery to the extent of Rs. 55,63,025 and alleged undisclosed income due to under-invoicing of machinery other than Stenter machinery to the extent of Rs. 13,36,982 made by the Assessing Officer under Chapter XIVB cannot be sustained in absence of any specific material brought on record by the Assessing Officer that the assessee has in fact received any "on money" over and above the invoice price in relation to the transactions with various parties, is correct, OR the view of the Judicial Member that the disputed additions made by the Assessing Officer on account of under-invoicing of Stenter machines to the extent of Rs. 55,63,025 and under-invoicing of machines other than Stenter machines t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. During the subsequent assessment proceedings, the Assessing Officer on the basis of the statement of Shri Ashwin B. Patel, Partner as also of one Shri H.A. Patel, Technical Executive of the assessee firm took the view that the firm had earned huge unaccounted income due to under-invoicing of sale price of machineries as also the unaccounted sale of machinery and parts, scrap and unaccounted purchase of machinery parts. In the present reference, I am apparently concerned with the additions pertaining to the first item i.e., under-invoicing of sale price of machineries. 4. The Assessing Officer recorded a finding in the assessment order to the effect that Shri Ashwin B. Patel had admitted under-invoicing of a sum of Rs. 9.50 lakhs in respect of the following four parties: M/s Anjani Synthetics Rs. 2.50 lakh M/s Shalu Dyeing Ptg. Mills Rs. 2.00 lakh M/s York Fashion Mills Rs. 3.00 lakh M/s Dayaram Ptg. Dyeing Mills Rs. 2.00 lakh. 5. In the course of the assessment proceedings, the Assessing Officer recorded the statement of one Sri Rain Bhagat Sarogi, Director of M/s Anjani Synthetics, who stated that he had paid a sum of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the date of search. The plea in other words was that the details of sales effected by the assessee prior to the said period could not be in the know of Shri H.A. Patel and the Assessing Officer therefore was not justified in opining that the assessee had under-invoiced the sales effected by the assessee to all the parties mentioned in the assessment order at a uniform rate of 20 per cent. 9. The further submission on the part, of the assessee before the Division Bench was that the Assessing Officer has not been able to find out from the purchasers as to whether they had paid any extra money in cash over and above the invoice price charged by the assessee from the purchasers. It was emphasized that the Assessing Officer had not brought any material or evidence on record except the statement of Shri H.A. Patel to allege that amounts had been received in cash over and above the declared sale price from the numerous parties numbering 15 in respect of Stenter machines and numbering 6 in respect of machines other than Stenter machines. 10. The ld. DR on behalf of the Department on the other hand strongly relied upon the order passed by the Assessing Officer contending that it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f search cases and was a code in itself for the computation of undisclosed income. It was the view of the ld. Accountant Member that whereas provisions of sections 68, 69, 69A, 69B and 69C could be applied but it was nowhere provided in the said chapter that provisions of section 145 would be applicable in computing the undisclosed income in block assessment. The view in other words was that undisclosed income could not be computed/ added on estimate basis by invoking the provisions of section 145 on the basis of a vague statement made by one of the employees of the assessee firm. According to ld. Accountant Member in case the Assessing Officer was not satisfied with the correctness of the profit shown in the books of account then he was free to make enquiries and on the basis of material found, he could make additions while framing a regular assessment under section 143(3) or 144 for the relevant assessment years. The aforesaid conclusions according to the ld. Accountant Member were supported by the judgment of the Hon'ble Gujarat High Court in the case of N.R. Paper Boards Ltd. The ld. Accountant Member accordingly upheld the action of the Assessing Officer in bringing to tax th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e material available on record but also as a result of confessional statement made by Shri Ashwin B. Patel as also the confessional statement made by Shri H.A. Patel, Technical Executive of the assessee firm; (viii) That the Assessing Officer had found that the assessee had under invoiced the sale price of every other machinery supplied by it in addition to what was originally admitted during the course of search action. A reference was also made to the deposition under oath of Shri H.A. Patel, Technical Executive of the firm; (ix) It was found by the Department during the course of the search that the assessee was making wrong classification of the machinery in the bills mainly to justify the lower sale price in the books of account; and (x) In the course of the statement recorded on 9-9-1995 more specifically question Nos. 46, 47 and 48 the assessee had categorically stated that he had received cash from a number of parties in addition to the four parties in respect of which specific receipts in cash over and above the bill figure had been admitted. 14. The ld. Judicial Member after recording the aforesaid facts vis-a-vis the assessment order itself proceeded to record th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nes, the ld. Judicial Member once again referred to the earlier facts including the statement of Shri H.A. Patel, Technical Executive and the relevant questions being No. 11 of the statement recorded on 9-9-1995 and wherein he had categorically stated that 10 per cent to 30 per cent of the sale price was taken in cash and the balance was taken by cheque. A reference was once again made to Question Nos. 46, 47 and 48 of the statement recorded on 9-9-1995. The ld. Judicial Member thereafter proceeded to confirm the addition of Rs. 13,36,982. Coming to the decisions relied upon by both the parties, the ld. Judicial Member proceeded to distinguish the judgment of the Gujarat High Court in the case of N.R. Paper Boards Ltd. observing that this did not help the assessee in any manner and he in turn derived support from the judgment of the Hon'ble Supreme Court in the case of H.M. Esufali H.M. Abdulali. 16. Before me, the ld. counsel for the assessee vehemently supported the view taken by the ld. Accountant Member on both the additions and subsequent arguments advanced by him were a reiteration of those tendered before the Division Bench. He laid emphasis on the following:-- (i) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even the calculation at page 7 of the assessment order was arbitrary and based on presumptions since the multiplier of 1.25 was a hypothetical figure; (x) That in respect of the addition pertaining to machines other than Stenter machines, the submission of Shri Hiralal Patel could not be relied upon since he had not said anything pertaining to receipt of extra cash in respect of the sale of machineries other than Stenter machines; (xi) As in the case of Stenter machines, this addition was also on estimate basis whereas it was an accepted position of law that the Assessing Officer was to restrict himself to the evidence/material found as a result of the search; (xii) That the A.D.I. in his appraisal report had made an estimate of Rs. 10 lakhs and the Assessing Officer while making the block assessment of the sister concern i.e., Babros Machinery Manufacturing Pvt. Ltd., had made an observation about "the sheer estimate made by the Investigating Officer"; (xiii) That Shri Ashwin B. Patel had not admitted receipt of "on money" in respect of transactions other than those, which had resulted in the addition of Rs. 9.77 lakhs; (xiv) That Shri Hiraial Patel had categorically s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machinery as also machinery other than the Stenter machinery. I may also mention that during the course of hearing, the ld. counsel made an alternative submission pertaining to the estimate made by the Assessing Officer in a sum of Rs. 65.40 lakhs and his submission was that four items in which under-invoicing had been admitted to the tune of Rs. 9.77 lakhs were to be excluded. I must categorically state that ultimately this alternative submission was not pressed and nothing more is required to be said on it. 19. The ld DR on behalf of the Department vehemently supported the view expressed by the ld. Judicial Member and in as much as his submissions were identical to those tendered in the case of the sister concern viz., M/s Babros Machinery Manufacturing Pvt. Ltd., I need not repeat at same in the present order. His reliance was also on the same authorities as cited in the case of the sister concern and on this ground such authorities need not find mention in the present order. 20. I have considered the rival submissions and have also perused minutely the orders passed by the ld. Members constituting the Division Bench. The decisions cited at the Bar have also been taken into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such parties had in replies to the Assessing Officer furnished under section 133(6) of the I.T. Act, 1961 stated that they had paid only the amount mentioned in the invoice; (5) All the purchasers aforesaid were assessed to tax and copies of the correspondence between the parties had been placed on the paper book; (6) The Assessing Officer had not brought any material on record except the submission of one Shri Hiralal Patel, the so-called Technical Executive to indicate that the assessee had in fact received "on money" in respect of transaction of sale of machinery to various parties other than those in respect of which addition of Rs. 9.77 lakhs was sustained; (7) Provisions of section 145 were not applicable in computing the undisclosed income in a block assessment and action if any could be taken by the Assessing Officer in a regular assessment made under section 143(3) or 144 for the relevant assessment years; [See my observation in respect of applicability of section 145 in the case of sister concern, which are made applicable in the present reference as well.] 22. According to the ld. Accountant Member the decision of the Hon'ble Gujarat High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has not only to meet each and every point made by his colleague but also to give thereafter his detailed reasoning for coming to a different conclusion. In this reference, I do not find any such exercise having been carried out on the part of the ld. Judicial Member, who has written a dissenting order. 26. As already stated earlier, the assessee's counsel placed on record during the course of the present reference a copy of the order passed by the Additional Commissioner (Central Excise) Ahmedabad I and a perusal thereof shows that other than the four transactions, which resulted in an addition of Rs. 9.77 lakhs in the present case, it is not the stand of the Excise Authorities that "on money" was received in each and every transaction. At page 9 of the order, the recovery proceedings in respect of M/s Dayaram Dyeing Printing Works have been dropped on grounds of limitation and the demand of Rs. 10,000 in respect of a sum of Rs. 2 lakhs recovered as "on money" from M/s Shalu Dyeing has been confirmed and there is also a recovery of Rs. 654 in respect of waste and scrap, which of course is not the subject-matter of the present reference. Lastly there are levies of three separate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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