2002 (12) TMI 191 - AT - Income Tax

Summary

Issues Involved:
1. Admitted unaccounted income due to under-invoicing of bills.
2. Unaccounted income due to under-invoicing of machinery.
3. Unaccounted sale of machineries due to stock deficit.
4. Unaccounted purchase of materials.
5. Unaccounted income on account of various credits recorded in the diary maintained by Maltiben.
6. Unaccounted sale of scrap.
7. Unaccounted income due to forfeiture of advance money received from M/s Mahendra Suitings.

Summary:

1. Admitted Unaccounted Income Due to Under-Invoicing of Bills:
The assessee admitted to receiving Rs. 9.77 lakhs in cash over and above the invoiced price from four parties. The Tribunal upheld the addition of Rs. 9.77 lakhs as undisclosed income.

2. Unaccounted Income Due to Under-Invoicing of Machinery:
The Assessing Officer estimated under-invoicing at an average of 20% for the entire sales of machineries, resulting in an addition of Rs. 55,63,025. The Tribunal found that the Assessing Officer did not provide specific material evidence for this estimation and thus deleted the addition.

3. Unaccounted Sale of Machineries Due to Stock Deficit:
The Assessing Officer added Rs. 6,39,000 due to a stock deficit. The Tribunal found discrepancies in the stock valuation and reduced the addition to Rs. 40,000, representing the net profit that could have been earned from the alleged unrecorded sales.

4. Unaccounted Purchase of Materials:
The Assessing Officer added Rs. 13,59,000 for unaccounted purchases. The Tribunal deleted this addition, accepting the assessee's explanation and allowing the deduction u/s 37 for business expenditure.

5. Unaccounted Income on Account of Various Credits Recorded in the Diary Maintained by Maltiben:
The Assessing Officer added Rs. 2,27,000 based on credits in a diary. The Tribunal allowed the benefit of telescoping with the admitted "on money" receipts and deleted the addition.

6. Unaccounted Sale of Scrap:
The Assessing Officer added Rs. 3,79,700 for unaccounted scrap sales. The Tribunal found overlapping entries and reduced the addition to Rs. 2,00,000 for the entire block period.

7. Unaccounted Income Due to Forfeiture of Advance Money Received from M/s Mahendra Suitings:
The Assessing Officer added Rs. 36,975 for forfeited advance money. The Tribunal deleted this addition, noting that the amount was recorded in the books and offered for assessment in the subsequent year.

Separate Judgment by Judicial Member:
The Judicial Member disagreed with the deletion of additions for under-invoicing of machinery (Rs. 55,63,025 and Rs. 13,36,982), supporting the Assessing Officer's estimation based on statements and seized documents. The matter was referred to a Third Member, who upheld the view of the Accountant Member, leading to the deletion of these additions.