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TMI Blog2011 (8) TMI 658X X X X Extracts X X X X X X X X Extracts X X X X ..... uted in respect of unaccounted sale of arrack against the income shown as miscellaneous income for the assessment year 2001-02 amounting to Rs. 8,76,75,000 and during the block period, he had assigned miscellaneous income amounting to Rs. 37,34,44,099 for the assessment years 1989-90 to 2001-02. - Tribunal has arrived at the finding that the assessee is entitled to set off of Rs. 6,00,00,000 against the undisclosed income from arrack business for the year 2001-02 and also for the block period - held that:- The said reasoning of the Tribunal is clearly erroneous and cogent and consistent reasons had been given by the Assessing Officer and the appellate authority for rejecting the said claim of the assessee for set off. Therefore, the benefit of set off given to the assessee by the Tribunal cannot at all be sustained and the same is liable to be set aside as it is perverse and arbitrary - Decided in favor of revenue. Inclusion of Excise duty in the sale price of sachet as also the levy of surcharge - held that:- the inclusion of the said Excise Duty is unassailable and levy of surcharge and interest is also justified in view of the decision of the Hon'ble Supreme Court in Rajiv Bhata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted an error in holding that the rate of unaccounted sale of arrack sachets sold outside the territory was Re. 3.60 per sachet and not Re. 0.12 without any basis in arriving at such an erroneous conclusion ? 3. Whether the Tribunal failed to take into consideration the unaccounted sale of arrack sachets made outside the territory which was to the licensed dealers and not directly to the consumers ? 4. Whether the Tribunal committed an error in holding that a sum of Rs. 6,00,00,000 representing undisclosed income of the assessee has to be set off against the miscellaneous receipts of Rs. 8,76,75,000 declared by the assessee in the regular return as the miscellaneous receipts shown by the assessee is nothing but income in respect of unaccounted arrack business ? 5. Whether the Tribunal committed an error on facts and in law in holding that the miscellaneous receipts offered by the assessee in his regular return of income was the undisclosed income earned out of unaccounted sale of arrack on mere surmises & conjectures & recorded a perverse finding ? 6. Whether the Tribunal was justified in treating the entire sum of Rs. 6,00,00,000 as miscellaneous receipts consisting of on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was found that the assessee had sold 1,97,74,000 sachets of 100 ml. each outside his own territory and wherefore, notice was issued to the assessee. The assessee did not dispute that he had sold the said quantity of sachets outside his own territory. But, his contention is that he had sold the sachets outside his own territory as there is no bar to sell the same at a price of Rs. 1.20 Ps., per sachet and excise duty cannot be included in the price and he is entitled to set off of undisclosed income in view of the miscellaneous receipts produced by him, which represents the amount realized by sale of arrack outside his own territory. 4.2 The Assessing Officer held that the assessee had admittedly sold 1,97,74,000 sachets of unaccounted arrack as per the incriminating material found during the search and he assessed the value of the unaccounted arrack at Re. 0.12 per sachet as against Re. 0.9 submitted by the assessee for computing the undisclosed profit generated by unaccounted sale of arrack in respect of assessee's own territory as well as sale outside assessee's own territory. The Assessing Officer rejected the claim of the assessee for set off on the ground that he failed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer was directed to reconsider the issue after giving effect to the order passed by the Tribunal. 4.5 The assessee, being aggrieved by the abovesaid order of the Tribunal dated 26-5-2005, has preferred I.T.A. No. 3027/2005 stating that the sale price of unaccounted arrack fixed by the Tribunal is excessive and set off claimed by the assessee ought to have been given by the Tribunal and the lower authorities and excise duty ought not to have been included by the authorities while arriving at the sale price of the unaccounted arrack and the authorities were also not justified in charging interest and surcharge. 4.6 The Revenue, being aggrieved by the said order of the Tribunal has preferred I.T.A. No. 3136/2005 contending that the finding of the Tribunal that the sale price of unaccounted arrack outside assessee's own territory adopted by the Tribunal at Rs. 1.60 Ps. per sachet instead of Rs. 12 is without any basis and the Tribunal has also erred in giving set off of Rs. 6,00,00,000 against the undisclosed income from arrack business outside assessee's own territory, which is baseless as the assessee has not established that the miscellaneous receipts produced by him represented t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 310 ITR 105/178 Taxman 285 wherein it is held that in search and seizure proceedings, even without the proviso to section 113 of the Act inserted vide Finance Act, 2002, with effect from 1-6-2002, surcharge was leviable on the tax and proviso to section 113 of the Act is clarificatory in nature. 9. The learned counsel appearing for the assessee submitted that the said decision has been referred to a Larger Bench and wherefore, surcharge could not have been levied by the Tribunal and the lower authorities. 10. We have given careful consideration to the contentions of the learned counsel appearing for the parties and scrutinized the material on record. Regarding sale price of unaccounted arrack: 11. Scrutiny of the material on record would clearly show that the material seized from the premises of the assessee revealed that 1,97,74,000 sachets of arrack had been sold unaccounted and out of the same, 1,03,52,000 sachets were sold in assessee's own territory and 94,22,000 sachets were sold outside the assessee's own territory. The assessee submitted that the sale price of the unaccounted arrack in respect of his own territory may be taken at Rs. 9 per sachet. He also submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see has admitted that he has not included the Excise duty in the sale price. Having regard to the fact that the assessee cannot sell arrack directly to the consumers outside his own territory and the same has to be sold to the contractors outside his own territory, the sale price taken by the Tribunal at Rs. 1.60 Ps. per sachet plus excise duty of Rs. 2 per sachet cannot at all be said to be arbitrary or perverse. The appellate authority and the Assessing Officer proceeded on the basis that since the assessee had shown in the books of account that the sachets were sold at Rs. 12 per sachet in respect of his own territory, the same price had to be adopted in respect of unaccounted sale of arrack outside the assessee's own territory. Having regard to the notification issued by the Excise department, Government fixing the rate of arrack at Rs. 8.50 Ps. per sachet and the rate at which arrack was sold by MSIL, and the contractors in the neighbouring area of Pavagada and other places and prices prevalent outside the assessee's own territory, wherein the assessee has sold the unaccounted arrack, it is clear that the said finding of the Tribunal is justified and does not suffer from any a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rns with the suppressed profit/income from the unaccounted sale of sachets of arrack. It is for the appellant to prove that the said miscellaneous income was earned from the unaccounted sale of arrack and apart from the self-serving statement of the assessee, there is no material whatever to hold that the assessee established that the income derived from the unaccounted sale of arrack was included in the miscellaneous income i.e., 'income from other sources'. The appellate authority held that the proposal made in respect of K.G. Hanumantha Raju for proceedings under section 263 of the Act and subsequent, dropping of the proceedings against him in view of the explanation submitted by him in that case, would not be helpful to the assessee in the present case as in the present case, no material whatever is produced to show that there is link between the amount received from unaccounted sale of arrack and the miscellaneous income shown during the assessment year 2001-02 and admittedly, the assessee has not furnished the break-up of the miscellaneous receipts or the basis for such break-up. However, without considering the said reasons assigned by the appellate authority and the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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