2003 (11) TMI 298 - AT - Income Tax

Summary

Issues Involved:
1. Legality of provisions of Section 132(1) and assessment under Section 158BC.
2. Addition on account of undisclosed income from manufacturing and sale of calcium carbonate.
3. Addition on account of debit balances.
4. Addition on account of deposits in bank account.
5. Addition on account of bid money payment.
6. Levy of interest under Section 158BFA(1) and penalty under Section 271(1)(c) read with Section 158BFA(2).

Issue-wise Detailed Analysis:

1. Legality of Provisions of Section 132(1) and Assessment under Section 158BC:
The cross-objection filed by the assessee challenging the legality of provisions of Section 132(1) while completing assessment under Section 158BC was not pressed by the counsel of the assessee. Therefore, the cross-objection was dismissed.

2. Addition on Account of Undisclosed Income from Manufacturing and Sale of Calcium Carbonate:
The assessee's appeal contested the addition of Rs. 48,00,000 based on estimated turnover derived from seized materials (B-29, LP-18, and B-19). The CIT(A) reduced the estimated turnover to Rs. 2,10,10,249 and applied a net profit rate of 6.5%, resulting in an addition of Rs. 13,65,666. The Tribunal found that since the Department accepted the purchases, there was no basis for estimating additional sales. The Tribunal deleted the addition, holding that no unaccounted purchases were found, and the sales were duly recorded in the regular books of accounts.

3. Addition on Account of Debit Balances:
The AO made an addition of Rs. 28,73,759 based on discrepancies in balances as per ledger B-29. The CIT(A) reduced this to Rs. 8,19,215, excluding amounts already recorded in regular books. The Tribunal deleted the remaining addition, noting that the entries in B-29 were maintained by an employee and not supported by further material evidence. The Tribunal held that the Department had not proved sales outside the books of accounts.

4. Addition on Account of Deposits in Bank Account:
The AO added Rs. 42,15,000 based on cash deposits in the assessee's bank account, which were explained as cash sales. The CIT(A) deleted the addition, noting that these sales were recorded in the regular books of accounts. The Tribunal upheld the CIT(A)'s decision, confirming that the source of deposits was from recorded cash sales and could not be questioned under Chapter XIV-B.

5. Addition on Account of Bid Money Payment:
The AO added Rs. 4,00,000 as unexplained investment for bid money payment. The CIT(A) confirmed the addition. The Tribunal deleted the addition, noting that the amount was invested by Shri Umesh Gupta, whose details were provided but not verified by the AO. The Tribunal held that the amount could not be attributed to the assessee.

6. Levy of Interest under Section 158BFA(1) and Penalty under Section 271(1)(c) Read with Section 158BFA(2):
The CIT(A) upheld the levy of interest under Section 158BFA(1) as mandatory but directed the AO to recompute it after giving effect to the order. The Tribunal did not find any further issues on this ground.

Conclusion:
The Tribunal dismissed the cross-objection of the assessee, partly allowed the assessee's appeal by deleting the additions of Rs. 13,65,666 and Rs. 8,19,215, and the addition of Rs. 4,00,000. The Tribunal upheld the CIT(A)'s deletion of Rs. 42,15,000. The Department's appeal was dismissed.