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2005 (6) TMI 558 - HC - Income TaxUndisclosed income on account of suppressed sales of oil and oil-cakes - purchases of tin plate for manufacture of tins - manufacture of tins in excess of the number reflected by the books of account - concealed income - Whether, the conclusions drawn by the Tribunal against the appellant are perverse, in that no reasonable person could have reached these conclusions on the basis of the evidence on the record of the case ? - HELD THAT - Once the Tribunal had found after appreciating evidence on record that no case was made out for making any addition on account of any suppressed sales of unaccounted oil and oil-cakes, it ought to have approached the issue of alleged suppressed production of tins in light of the basic case of the assessing authority, namely, the assessee was not a dealer in tins and it was not even alleged that the said tins were sold away. This becomes all the more material when one bears in mind that the assessing authority has categorically found that such alleged suppressed production of tins viz., 28,284 tins were not reflected in the closing stock. The question that the Tribunal was required to pose to itself was as to whether Revenue was justified in making addition on such count especially when Tribunal itself had recorded in no uncertain terms that there was no production of undisclosed oil and oil-cakes. The Tribunal having failed to address itself in this regard would go to show as an additional factor that the explanation tendered by the assessee was not unreasonable, was not fanciful and was duly supported by evidence and material on record and the Tribunal failed to not only appreciate but even consider the said evidence. It is necessary to record that the assessee had made a specific grievance before CIT(A) to the effect that though statement of the concerned person of M/s Girishchandra Co. had been recorded by the assessing authority, despite a specific request, no opportunity to cross-examine the said party was offered, and to the contrary the assessing authority had relied upon the said statement. The CIT(A) has mentioned the aforesaid objection in paragraph No. 7.1 of his order. The Tribunal has also recorded the grievance in paragraph No. 10 of its order. However, both the authorities have thereafter not appreciated the significance of the grievance made while confirming the addition in tin account. This factor would also go to vitiate the impugned order of Tribunal. Thus, it is not necessary to enter into a detailed discussion of the procedure adopted to work out the so-called deficit of manufactured tins as per books of account. All the authorities have proceeded on the presumption that firstly, each component set would result in one manufactured tin container; secondly, each component set would yield a tin container of equal weight. Though, both the premises, prima facie, do not appear to be justified, in view of what is stated hereinbefore, it is not necessary to enter into any further discussion on this aspect of the matter. In the result, the Tribunal was not justified in rejecting the evidence in the form of certificates and statements filed during the course of assessment proceedings; it was also not justified in holding that purchases of tin plates for manufacture of tins were not made on the basis of weight but on the basis of number of component sets; the consequential finding that there was suppression of production of 28,284 tins by the assessee and the value thereof was to be added in the income of the assessee also cannot be justified on the facts of the case. Accordingly, question Nos. 1 to 5 raised at the instance of the assessee are answered in the negative i.e., in favour of assessee and against Revenue. Similarly, for the reasons stated hereinbefore, question No. 6 at the instance of the assessee is answered in the affirmative i.e., in favour of the assessee and against Revenue. The reference stands disposed of accordingly with no order as to costs.
Issues Involved:
1. Deletion of addition on account of suppressed production of oil and oil-cakes. 2. Rejection of evidence in the form of certificates and statements filed during the assessment proceedings. 3. Basis of purchases of tin plates for manufacturing tins. 4. Suppression of production of 28,284 tins. 5. Justification of Tribunal's conclusions based on the evidence on record. Detailed Analysis: 1. Deletion of Addition on Account of Suppressed Production of Oil and Oil-Cakes: The Tribunal confirmed the CIT(A)'s deletion of additions made by the AO for suppressed production of oil and oil-cakes. The AO had added Rs. 54,23,457 for the alleged suppressed production of 28,284 tins of oil and Rs. 12,44,130 for the suppressed sales of oil-cakes. The Tribunal found that the assessee maintained regular books of account and stock records, which were scrutinized and accepted by the Excise and Sales-tax Departments. The Tribunal concluded that the AO's additions were based on presumptions without specific evidence of discrepancies in the assessee's records. 2. Rejection of Evidence in the Form of Certificates and Statements: The Tribunal rejected the evidence submitted by the assessee, including certificates and statements from suppliers and brokers, which supported the claim that purchases were made based on weight rather than the number of component sets. The Tribunal dismissed these documents as they were produced during the assessment proceedings and not contemporaneously with the purchase invoices. 3. Basis of Purchases of Tin Plates for Manufacturing Tins: The AO concluded that the purchases of tin plates were made on the basis of the number of component sets rather than weight, leading to the inference of suppressed production of tins. The AO's conclusion was based on the examination of purchase bills which indicated the purchase of unsoldered tin sets by number. The assessee argued that the purchases were actually made by weight, and the number of sets was mentioned to comply with government regulations. 4. Suppression of Production of 28,284 Tins: The AO alleged that the assessee suppressed the production of 28,284 tins, calculating this figure based on the number of component sets purchased and the number of tins produced as per the stock register. The Tribunal upheld this finding, stating that the evidence provided by the assessee did not override the purchase invoices' clear descriptions. 5. Justification of Tribunal's Conclusions Based on the Evidence on Record: The Tribunal's order was found to be lacking in detailed discussion and appreciation of the evidence provided by the assessee. The Tribunal failed to consider the cumulative effect of the various pieces of evidence, including weighment slips, gate passes, and supplier statements, which supported the assessee's claim that purchases were made by weight. The Tribunal's approach was deemed unreasonable and based on presumptions without adequately addressing the evidence on record. Conclusion: The Tribunal's findings were overturned, and the additions made by the AO for suppressed production of oil and oil-cakes were deleted. The Tribunal's rejection of the assessee's evidence was found to be unjustified, and the purchases of tin plates were determined to be made by weight rather than by the number of component sets. The alleged suppression of production of 28,284 tins was not supported by the evidence, and the Tribunal's conclusions were deemed perverse. Consequently, the questions raised by the assessee were answered in their favor, and the reference was disposed of with no order as to costs.
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