9911796707
TMI Blog2002 (12) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... Unaccounted sale of machineries due to stock deficit Rs. 6,39,000 (5) Unaccounted purchase of materials Rs. 13,59,000 (6) Unaccounted 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& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led the return for the Block Period on 18-4-1998 declaring total undisclosed income at Rs. NIL. 3. 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 firm had earned huge unaccounted income on account of- (a) Under-invoicing of sale price of machineries (b) Unaccounted sale of machinery and parts (c) Unaccounted sale of scrap (d) Unaccounted purchase of machinery parts. 4. The Assessing Officer also gave a finding in the assessment order that Shri Ashwin B. Patel had admitted under-invoicing of Rs. 9.50 lakhs in respect of the following four parties, viz. 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 &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; 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. Ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 11,71,000 14,63,750 2,92,750 13. Dayaram Ptg.& Dyeing 29-11-93 19,73,264 24,66,580 4,93,316 14. Paras Fab. & Dyeing 18-5-94 14,61,000 18,26,250 3,65,250 15. Chamunda Textile 13-3-95 20,25,000 25,31,250 5,06,250 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Expenditure (A) B=A*1.25 --------------------------------------------------------------------------------------- (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; 37,750 6. Ashok Fashion 31-8-95 2,50,000 3,12,500 62,500 31-8-90 2,28,930 2,86,162 37,232 -------- &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale consideration actually received by it. It was further submitted that Shri H.A. Patel was working 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 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account and the assessee had offered the same as income in the subsequent year. In any case 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 ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... voiced price noted by the assessee while supplying those machines to the respective purchasers. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation given at page 11 of the assessment order. Since the valuation of stock found by the Survey 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 st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the purpose of business of the assessee. We find force in this submission which is duly supported 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 &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of scrap for a period of nine years on the basis of Rs. 15,000 per year. We have considered the rival submissions. It is undisputed that the assessee admitted Lochru receipts of Rs. 13,000 and Rs. 52,500 for assessment years 1992-93 and 1994-95 which has not been reflected in the books of account. Further there are notings of various items on account of sale of scrap in the diaries 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 unacc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) Unaccounted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and parts (c) Unaccounted sale of scrap (d) Unaccounted purchase of machinery parts. 5. Regarding under-invoicing of sale price of machineries, the Assessing Officer observed that incriminating evidence collected at the time of search action indicated that the assessee has earned huge unaccounted income on account of (a) under-invoicing of sale price of major machineries, and (b) charging income in cash over and above the billed sale price outside the books of account. Regarding the fact where the assessee firm had taken cash over and above the billed sale price of machineries, in response to question No. 5 of the statement recorded on 8-9-1995 under section 133A. Shri Ashwin B. Patel, a partner of the firm admitted that indeed the cash was taken over and above the sale bill price. Question No. 5 and its answer are reproduced as under: Q.5: Have you or your concern ever taken cash against the sale which is not accounted for in the books of account. Ans: Yes. 6. In response to question Nos. 7, 8, 10, 11, 13 and 20 of the statement recorded on 8-9-1995 the assessee admitted to have received cash over and above the sale bill price. Shri Ashwin B. Patel-partner of the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; Anjani Synth. 5 Ch. Pin & Clip 15,15,000 91-92 Stenter + 3BPM 2. 11-10-86 Shalu Dyeing, Hot Air Stent. 10,96,000 86-87 Surat. M/C + 3BPM 3. 7-2-93 York Fabrics 3 Ch. Pin & Clip 18,10,254 93-94 Stenter + 3BPM 4. 29-11-93 Dayaram Ptg. 5 Ch. Pin & Clip 21,80, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r found from the various notings made in the loose paper 155 seized from the residence of assessee inventorised at Sr. No. 10 of Annexure A-1 as discussed in para 1.2 of the assessment order and confessional statement by Shri Ashwin B. Patel wherein response to question No. 20 recorded under section 133A and also confessional statement made by Shri H.A. Patel, Technical Executive of the firm as discussed in para 1.3 of the assessment order, prove that subsequent retraction with respect to receipt of cash of Rs. 3 lakhs from M/s York Fabrics is an afterthought and baseless. Therefore the entire receipt of Rs. 9.77 lakhs is unaccounted income on account of under-invoicing of sale bills to four parties as discussed above, during the relevant accounting year in which these machineries were sold. 14. The Assessing Officer further found that the assessee has under-invoiced the sale price of machinery in almost every other Stenter and other machines supplied by it in addition to what was originally admitted during the course of search action. In this connection, the deposition under oath of Shri Hiralal Patel the Technical Executive of the firm is relevant to prove that the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has sold at least 15 Stenter machines. The recorded price as per books i.e., under-invoiced price, the date of sale, name of the party, the actual price (i.e., estimated by multiplying 1.25 to the recorded price), the difference is given below: --------------------------------------------------------------------------------------- Sr. Name of the Date of Invoice Price Actual Price Difference No. Party Sale before sales before ST/CST tax/Centrat Packing &n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28-9-91 20,00,000 25,00,000 5,00,000 8. Gauhati Cotton Mills 25-2-92 23,64,500 29,55,625 5,91,125 9. Aspief Textile Prints 30-3-92 17,00,000 21,25,000 4,25,000 10. York Fabrics 7-2-93 16,59,000 20,73,750 4,14,750 11. Rama Raju Surgicals 16-8-93 16,53,000 20,66,250 4,13,250 12. Trim Exports 7-9-93 11,71,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order that the assessee himself admitted to have concealed income on account of under-invoicing of sales of machinery. As discussed in para 1.6 of his order, Technical Executive of the assessee firm Shri H.A. Patel in response to question No. 11 of the statement recorded under section 131 on 9-8-1995 has categorically stated that 10 per cent to 30 per cent of the sale price of the machinery was taken in cash and the balance is taken by cheques. Further during the course of search in response to question Nos. 46, 47 and 48 of the statement recorded on 9-9-1995 the assessee has categorically stated that he had received the cash in respect of number of parties in addition to four parties as discussed in para 1.5 of the assessment order in which specific quantum of concealment was admitted by him. However, the assessee failed to give specific quantum of cash receipt due to under-invoicing of machinery except in respect of four parties only to avoid payment of tax. As discussed above in para 1.6(i) of the assessment order, the Assessing Officer estimated the concealment of 20 per cent of actual price as amount of under-invoicing of sale of machineries. Due to similar reasons as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; (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 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; 2,86,162 37,232 -------- Total 13,36,982 --------------------------------------------------------------------------------------- 17.1 Thus, the total concealment worked out on sale of machinery other than the Stenter machines is Rs. 13,36,982. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied 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. It was also pleaded that Shri H.A. Patel, Technical Executive of the assessee firm has admitted that under-invoicing of sale price ranges from 10 per cent to 30 per cent. As such the Assessing Officer was perfectly justified in making the addition on account of under-invoicing of sale price by taking quantum of under-invoicing of 20 per cent of sale price shown in the invoice. The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the aforesaid parties. Simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Executive of the assessee firm S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bers 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 and had a reasonable nexus with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 As there is difference of opinion between t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 to the extent of Rs. 13,36,982 is required to be sustained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer 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 procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that Shri H.A. Patel was working as a Technical Executive w.e.f. 11-11-1991 and subsequently as Sales Marketing Executive for the last one year prior 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of machineries to such parties. 12. According to the ld. Accountant Member Chapter XIV-B dealt with a special procedure for the assessment of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the unaccounted income of the assessee as a result of under-invoicing of sales to four parties and that it stood proved not only from the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition of Rs. 55,63,255 and coming to the other addition of Rs. 13,36,982 in respect of sales of machinery other than Stenter machines, 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 arg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) It was an accepted proposition of law that addition on estimate basis could not be made in a block assessment; (ix) That 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 oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legation of the Income-tax Department that the assessee had received "on money" in respect of the sale of Stenter 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 pass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer and various parties other than the four in respect of which "on money" receipts had been confirmed and 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the duty cast on the ld. Member who writes a dissenting order is much heavier in as much as he 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 cou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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