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Issues Involved:
1. Quantity of sponge iron found during the search. 2. Validity of the visual estimate versus actual weighment. 3. Justification of the addition of Rs. 4,69,380 as undisclosed income. Issue-Wise Detailed Analysis: 1. Quantity of Sponge Iron Found During the Search: The search took place on 28-12-1996, and an inventory was made based on a visual estimate, showing approximately 1,600 M.T. of sponge iron. The assessee protested this visual estimate, and the department agreed to weigh the stock. On 4-12-1997, another Panchnama was prepared, showing a visual estimate of 1,616 M.T. and an actual weighment of 313.200 M.T. The assessee claimed that the actual weighment included current stock, which was not part of the deemed seizure. 2. Validity of the Visual Estimate Versus Actual Weighment: The Panchnama dated 4-12-1997 confirmed that the weighment was only of the stock found on 20-12-1996 and placed under deemed seizure under section 132(3). The Assessing Officer did not accept the assessee's claim of irregular weighment, as no objection was raised during the actual weighment process. The stock found as per the actual weighment was 313.200 M.T., while the stock as per the assessee's books was 231.568 M.T., resulting in an excess stock of 81.632 M.T., treated as undisclosed income under section 69A. 3. Justification of the Addition of Rs. 4,69,380 as Undisclosed Income: The assessee argued that the actual weighment was not properly done and included current stock. The Assessing Officer, however, noted that no objection was raised during the weighment, and the excess stock of 81.632 M.T. was unexplained. The Judicial Member dissented, pointing out inconsistencies in the weight estimates and the lack of proper weighment charts. The Judicial Member also noted that the assessment under section 158BC should be based on definite material found during the search, not on conjecture and surmises. Separate Judgments Delivered: Judicial Member's Dissenting Opinion: The Judicial Member disagreed with the majority view, emphasizing that the assessment under section 158BC was based on questionable documents and irregularities in the actual weighment. He noted that the same bulk of sponge iron was not weighed and that the certificate confirming the same stock was absurd. He also pointed out the inconsistency in the weight estimates and the lack of proper weighment charts. The Judicial Member concluded that the addition of Rs. 4,69,384 was not justified and allowed the assessee's appeal. Third Member's Opinion: The Third Member agreed with the Accountant Member, concluding that the addition of Rs. 4,69,380 was justified. He noted that the actual weighment was carried out in the presence of witnesses and the assessee's representative, and the stocks were identified as the same seized during the search. The Third Member found the assessee's objection to be an afterthought and without supporting material. He held that the discrepancy in the sponge iron stock was established and that section 69A was applicable. Final Order: In accordance with the majority view, the issue was decided in favor of the revenue, and the assessee's appeal was dismissed.
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