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TMI Blog2012 (10) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... be carried out without some undisclosed purchases. In view of ITAT addition was very reasonable addition by AO. Decided in favor of revenue - IT(SS) 63/Del/2006 & IT(SS) 84/Del/2006 - - - Dated:- 13-7-2012 - SHRI R.P. TOLANI AND SHRI T.S. KAPOOR JJ. Department by : Shri R.I. S. Gill CIT(DR ) Assessee by : Sh. Suresh Kumar Gupta Adv. O R D E R PER R.P. TOLANI, J.M: These are cross-appeals by the revenue as well as the assessee, assailing CIT(A) s order dated 30-12-2005 on respective grounds pertaining to block period 1-4-1998 to 13-2-2003. Both the appeals are heard together and disposed of by a consolidated order. 2. The main appeal is by the Revenue, raising following effective grounds: 1. On the facts and circumstances of the case, the Ld. CIT(A) has erred in deleting the addition of Rs. 19,86,359/- and Rs. 30,45,504/- respectively for the financial year 1998-99 and 1999-2000 for the block period, made on account of undisclosed/ concealed income on the basis of sale bills seized during the search operation under section 132 of the Income-tax Act, 1961 which had not been accounted for by the assessee in the account books. 2. On the facts and circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the legality of the above action, the Ld. CIT(A) should have allowed the benefit of sales returns granted by himself holding the 20% of the sales as genuine sales returns, for working out the addition in question. 3. Brief facts are: Assessee deals in vanaspati oils. Search and seizure operations were carried out 13-02-2003 at the business and residential premises of the assessee. The documents seized mainly consisted of undisclosed sale bills for F.Y. 1998-99 and 1999-2000 and transport receipts. According to Assessing Officer , the assessee had devised a practice of claiming inflated sale returns of vanaspati ghee on the ground that goods supplied were defective in nature. Assessee claimed that the goods were damaged and not accepted by the purchasers which were returned to the assessee and claimed against profits. Assessee s books were rejected and on consideration of material on record, explanation, block assessment in case of assessee resulted in following additions by Assessing Officer: Asstt. Yr: 1999-2000: Undisclosed income on account of suppression sales as discussed above as per para 27 Rs. 44,24,130/- Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed sales of Rs. 9,25,55,028/-, Rs. 30,18,08,393/- for the financial years 1998-99 and 1999-2-000 respectively. 3.3. CIT(A) further observed that books of A/c for A.Y. 1999-2000 2000-01 were not produced before ADI(Inv.) during the course of assessment proceedings up to 15-2-2005. These books were not produced before Assessing Officer on the pretext that they were lying with Central Excise Department. CIT(A) held that these books were not reliable and were rejected on the ground that: (i) Non-production of stock register, journals before Assessing Officer. (ii) The entries regarding sale returns being at variance with the actual sale returns. (iii) Findings of Assessing Officer in paras 11 to 15 of his order were justified. It was held that Assessing Officer had rightly made the assessment u/s 158BC on the basis of seized material read with sec. 144/145 of the I.T. Act. 3.4. Assessee pleaded that the details were arrived at by adding figures from duplicate/ triplicate copy of the sale bills etc. A reconciled statement vide Annexure E1 E2 along with canceled bills was filed. CIT(A) found that there were totaling mistakes of Rs. 10 lacs and Rs. 98,72,846/- respectively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- as the same was out of the books, it was added as undisclosed investment of the block period. 4.1. CIT(A) deleted this addition by following observations: 14. Before me, it is argued that the addition has been made on an hypothetical and a pure assumption Section 158B(b) speaks of those additions which are based on the basis of material/ document found during the course of search/ on the basis of entries in the books of account or other documents. The sales culled as above, are on the basis of seized sale bills and are not the exclusive entries uncommon to others. There is no evidence of any purchases outside the books of account with reference to above said sales. Hence, on the basis of these entries alone, no such addition could be made independently unless there are purchases outside the books of account to prove any undisclosed income. Before me, it is argued that there has been regular purchases of vanaspati from 1.4.1998 to 28.4.1998 of 292.949 (-) 5.544 = 258.675 MT (28.73 MT 5.544 MT are the purchases made on 29.4.1998 and 30.4.1998). The sales from 1.4.1998 to 28.4.1998 exclusive of sales return, are 310.49 (-) 15.374 = 295.566 MT, which is less than the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of the vanaspati, in its books of a/cs, the assessee claimed huge sales returns amounting to 26.15% and 64.72% respectively in F.Y. 1998-99 and 1999-2000. The vanaspati ghee is branded commodity and manufactured under the regulations of Essential Commodity Act. Being an edible item, it cannot be assumed that any brand will manufacture to such an extent defective ghee. Besides, in case the assessee has received such a quantity, then it will be returned by him to the manufacturer also. We are of the view that in normal circumstances, assessee cannot be allowed such goods return as claimed, more so, when the books of accounts are rejected. In our view CIT(A) has allowed goods return claim @ 20% without proper justification and on ad hoc basis. It appears that assessee indulged in non production of books on one reason or other. In Vanaspati business it is unbelievable to have such regular sale return claims. In our view ends of justice will meet if sale return claim is restricted to estimated 5%. Thus the undisclosed ales will be worked out accordingly. On the issue of mistakes in undisclosed sales totaling, CIT(A) ha properly considered the same, no interference is called for. 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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