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TMI Blog1991 (11) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ase are that the Department had conducted a survey under section 133A at the business premises of the assessee on 14-10-1982. It was conducted by the Inspector under the supervision of the ITO. It is gathered from the material on record and the orders of the authorities below and the arguments advanced from both the sides before us that while conducting the survey and pointing out the discrepancies in stocks, the Survey party did not conduct actual weighment of the commodities, namely, Gram crushed, Gram Dal, Chilka, Churi etc. but estimated the shortages which were agreed to by Shri Rameshchand one of the partners of the firm who was present there. During the course of assessment proceedings the IAC called for record and conducted proceedi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als) also opined that no addition for this shortage could be made and at the most the profits earned on such sales could have been added to the total income or this would have been a reasonable ground for rejecting the books of account and for applying "proviso to section 145(2) ". He further opined that if the shortage is added in the total income then the trading account cannot be recasted properly and hence, according to him even from accounuancy point of, view, this shortage could not be added. 4. In this background the learned Departmental Representative argued that the weight of these commodities was taken on estimate basis from the heaps which was agreed to by Shri Rameshchand, partner and there was no objection at the time of surv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofits on those sales which he himself had approved. He urged that entire addition made by the ITO should be restored. 5. The learned counsel for the assessee argued that assessee's stocks were at 11 places within same premises but all of them were not considered by the Survey party. He pleaded that the value of Chilka and Churi was very low as compared to Dal. He submitted that there was prohibition on export of these products outside Rajasthan on account of acute drought condition and lack of fodder for the cattle in Rajasthan at that time. He submitted that in fact the weight of these commodities was taken at the time of sale. He argued that the books of account of the assessee had not been rejected. Moreover, at the end of the year the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... retract from whatever they had stated or agreed to at the time of survey. In the instant case the record shows that the IAC has given sufficient time and opportunities to the assessee to explain the discrepancies and the assessee's only argument had been, as it had been before the CIT (Appeals) so also before us that actual weighment of the stock was not done. In our opinion, if according to the assessee there was no discrepancy in the stocks and the Survey party was working out discrepancy only on the basis of estimate, it was incumbent on the assessee to have insisted for actual weighment of the stocks and for pointing out that the stocks are lying at 11 places at the same premises and not to have readily agreed to the fact that the stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding account. We need not mention that according to provisions of section 145(2) if the ITO comes to the conclusion that the books of account maintained by the assessee are not correct and complete, he has to assess the income in the manner prescribed under section 144, which in turn provides that the ITO may assess the income to the best of his judgment. In the instant case, the leaned CIT (Appeals) has conceded that there was reasonable ground for rejecting the books of account and applying provisions of section 145(2). Hence the logical corollary is that the Assessing Officer under the directions of the IAC under section 144A(1) has worked out the shortages and has estimated their value on a reasonable basis and has made the impugned add ..... X X X X Extracts X X X X X X X X Extracts X X X X
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