TMI Blog1994 (9) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... corded, none of the partners of the assessee-firm were present. The Asstt. Director of Inspection also recorded oath statement on 21st Sept., 1989, from one of the partners, Shri Arunkumar Vaghjibhai Patel (AVP), which is found at pages 93 to 98 of the assessee's paper-book filed in the present appeal. The said AVP in answer to question No. 7 by the Asstt. Director of Inspection declined receipt of any vatav or tol-kasar from any farmers in respect of tobacco purchased but later in answer to question No. 23 when confronted with the statements of four farmers obtained by the Asstt. Director of Inspection on 20th Sept., 1989, the said partner (AVP) stated that the firm was getting 6% vatav and nonetheless whatever vatav is received, the same is recorded in account books which according to his for the S.Y. 2042 to 2045 was Rs. 3,54,934. He (AVP) further stated that the balance of vatav is not recorded out of 6% in answer to question No. 24. He further stated that the liabilities in the balance sheet were not genuine. In answer to question No. 25, he stated that various firms have earned Rs. 30,07,514 in different years and which sum included an amount of Rs. 7,80,000 earned in the cur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under s. 144A dt. 19th March, 1990, to the Dy. CIT. Rg. 1, Baroda reiterating non-receipt of any vatav or tol-kasar from the farmers and requesting him (DC) to issue suitable instructions to the Assessing Officer under the said provisions not to make any addition on account of vatav or tol-kasar as proposed by the Assessing Officer in his letter, which we have referred above. The assessee firm filed another letter dt. 24th March, 1991, to the Dy. CIT which is at pages 73 and 74 of the paper-book, drawing his attention to the answer to question No. 33 given by the managing partner Shri MBP to the Asstt. Director of Inspection on 4th Dec., 1989, about non-receipt of any vatav or tol-kasar from the farmers and again requesting for his intervention under s. 144A of the Act and for issue of appropriate instructions to the Assessing Officer. We are not informed or made aware by either of the representatives before us whether the Dy. CIT acted on the application of the assessee-firm and issued any instructions or directions to the Assessing Officer under s. 144A of the Act. However, for the purpose of deciding this appeal, the same does not seem to be relevant or important. 3. During ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s before him. (iv) Admission by Shri AVP that different firms have earned in different years huge sum of nearly Rs. 30 lakhs, out of which Rs. 7.8 lakhs was earned in the current year, i.e., the year under appeal. 6. The submission of the assessee to the Assessing Officer made through letter dt. 19th Feb., 1991, and through an application to Dy. CIT under s. 144A and letters to Dy. CIT as recorded by us elsewhere above in this order did not find favour with the AO. When the matter rested with the first appellate authority, i.e., the CIT(A) by way of first appeal, it was submitted as under before him: "(i) The books of accounts of the appellant are duly audited since long. The book results of the appellant have been accepted in all the previous years for last 30 years. In support of his claim the appellant has filed copy of the assessment orders for asst. yrs. 1984-85, 1985-86 and 1986-87. These assessments have been finalised by the Department without making any addition on account of the vatav received by the appellant. (ii) The appellant-firm which is dealing in tobacco, has maintained the prescribed register i.e., inward, process and outward registers though the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Tobacco, Tranol 1988-89 143(1) Rs. 47,764 No such addition has been made. 8. M/s K. Fakirbhai Sons, Anand 1989-90 143(3) Rs. 4,46,800 No such addition has been made. 9. M/s S.B. Finance Khambholaj 1988-89 143(1) Rs. 60,453 No such addition has been made. 10. M/s Shasikant Umedbhai Patel, Napad 1988-89 143(3) Rs. 96,146 No such addition has been made. 11. M/s S.B. Finance, Khambholaj 1989-90 143(3) Rs. 78,965 No such addition has been made. 12. M/s Shantilal Kalidas Sons, Anand 1989-90 143(3) Rs 19,24,840 No such addition has been made. (vi) The search was conducted at the business premises of the sister-concern of the appellant M/s Kantibhai Motibhai Patel. In this case the AO has also made an addition of Rs. 1,15,506 on the same basis. The learned CIT(A), Jabalpur (MP) has held that addition made without bringing any material on record and simply by disbelieving the version of the assessee cannot be justified. He, therefore, deleted the addition of Rs. 1,15,506 made by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SC 637 (vii) R.V. Kabili 22 CWN 80091 C 811 (viii) R.V. Balwant 11 BHCR 137 (ix) Namdang Tea Co. Ltd. vs. CIT (1982) 138 ITR 326 (Cal) According to Asstt. CIT, the additions at (a) and (b) were rightly made by the Assessing Officer and he, therefore, confirmed the same. Regarding the other additions from (c) to (e) above, he agreed with the Assessing Officer for the reasons given in the assessment order. The assessee-firm is, therefore, in appeal before us in respect of the above five additions confirmed by the Asstt. CIT. 8. We have carefully considered the elaborate arguments of both the sides with reference to the material brought on record by the assessee in the voluminous paper-book running into 307 pages. In our view, both the additions towards vatav (Rs. 10,01,385) and towards tol-kasar (Rs. 3,37,457) are required to be deleted, because they were primarily made on account of the admission of one of the partner Shri AVP before the Asstt. Director of Inspection on the search day in answer to question No. 23 that the assessee-firm received 6% vatav from farmers. Regarding receipt of tol-kasar i.e., 500 grams for every 20 kgs. of tobacco, the said Shri AVP in ans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd evidence of such a person. In such a situation, the matter/issue has to be decided on the basis of independent, clear, cogent and reliable evidence and material. On a careful examination of the case records placed before us, we are unable to find an iota of such independent, clear, cogent and reliable evidence or material on record nor our attention was drawn to any such evidence on record by the Departmental Representative. The Assessing Officer heavily relied on the statement of Shri AVP and the farmers and the notorious facts that there is a common practice in tobacco business that farmers give vatav and tol-kasar, and that the liabilities in the balance sheet are not genuine, that he will later make disclosure statement of undisclosed profit, that one of the Assessing Officer of Investigation Circle has made assessments in the case of some tobacco dealers/assessees assessing them on vatav and tol-kasar; while the Assessing Officer did not mention or give any specific instance or case laws or any related evidence, the Asstt. CIT got influenced by the disclosure made by the firm and partners called, "Padmala Group". The Asstt. CIT has not judiciously considered the evidence br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s the paramount duty of the Assessing Officer to collect clear, independent, cogent and reliable evidence and material and disprove Shri AVP and the four farmers. But, unfortunately this exercise has not been done by the Assessing Officer. On the contrary, the Assessing Officer acted perfunctorily and ineptly and made the additions at (a) and (b) above and the Asstt. CIT very conveniently affirmed those additions. 10. We do not agree with the Asstt. CIT that a person retracting from his earlier statement or testimony has to prove by lending cogent reasons and evidence as to whether he is to be believed or not or whether he is telling the truth or lie. In our view, it is a negative burden which had been cast upon the testifier Shri AVP. We only agree that Shri AVP should have proved that he was tortured by the search party and, therefore, the statement on the search day was untrue and should not be believed. However, we wish to say that on account of search operations, which is an invasion on the privacy of a citizen, a searched person is put to suffer inconveniences and harrassment and on account of that, there can be mental turmoil, uneasiness and tension. This Tribunal has tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssly erred in confirming the two additions of Rs. 10,01,385 towards vatav and Rs. 3,37,457 towards tol-kasar made by the Assessing Officer. We, therefore, direct the Assessing Officer to delete the same. 13. The third addition at (c) above came to be made by the Assessing Officer under s. 68 of the Act for the reason that two partners Shri Shashikant Mayabhai Patel (SMP) and Shri Arunkumar Vaghjibhai Patel (AVP) who sold tobacco to the assessee-firm cultivated from the agricultural land holdings belonging to family members of various partners (60 bighas) and from some agricultural lands taken on lease (i.e. 90 bighas) were unable to satisfy the Assessing Officer about the ownership or lease of the agricultural land holdings taken by both the abovementioned persons. The total purchase of tobacco from these two persons was 99,965 kgs. out of which the Assessing Officer considered 45,080 kgs. as explained satisfactorily from the agricultural land holdings and the balance of tobacco weighing 46,885 kgs. as unexplained from 75 bighas agricultural land holdings. The Assessing Officer worked out the same in terms of the money at a sum of Rs. 4,50,096, being @ 601 Rs. per bigha. This su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the first appellate authority, but was unsuccessful. The addition of the said sum of Rs. 4,50,096 added under 68 of the Act besides being preposterous, is wholly unjustified and the Asstt. CIT should have deleted the same. However, we now direct the Assessing Officer to delete the said sum of Rs. 4,50,096 while computing the total income of the assessee-firm for the year under appeal. 15. We have heard at great length the representatives of both the sides in respect of the remaining two additions of Rs. 1,35,925 (extra bidi patti sale) and of Rs. 63,219 (extra tobacco sale) which we have listed at (d) and (e) above. In this regard, we have also perused the application made by the assessee under s. 154 of the Act and the order passed by the Assessing Officer in relation to the addition towards extra bidi patti. In order to decide the abovementioned two additions, examination of account books, subsidiary registers-purchase and sale invoices and other connected material and papers which have nexus and bearing on the two additions is very vital and essential. The instant case is a search and seizure case and the assessee is not in custody or possession of those material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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