9911796707
TMI Blog2014 (11) TMI 511X X X X Extracts X X X X X X X X Extracts X X X X ..... er the search, can by no means be brought under the purview of Section 132(4) - the block assessment is not on the basis of any discovery of wealth, bullion or books of account. Additions on the basis of discrepancy between the two registers (RG-1) - Held that:- While excise duty becomes payable when the manufactured material is removed from the factory, the income tax becomes payable when the product is sold and sale proceeds accrue to the assessee. When it was not even alleged that the steel, representing the differential quantity, was sold, there was no basis to infer or imagine the accrual of income or the corresponding obligation to pay the income tax. It does not need any emphasis that the proceedings under Chapter XIV-B are penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is only after the steel that is produced on a particular day and recorded in the DRPR is cooled for three days, and weighed on approval of quality, that it can be entered in the RG-1 register. Other grounds such as that though search was made on 25-03-1999, statement was recorded on 11-05-1999 through the process of questioning and prolonged interrogation were also pleaded. Ultimately, the respondent filed return for the block period on 17-04-2000 declaring nil income. The assessing officer passed an order on 27-03-2002 treating a sum of ₹ 17,64,780/- representing the cost of 134 metric tonnes of steel as the taxable income. Aggrieved by the order passed by the assessing officer, the respondent filed an appeal before the Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on completion of cooling, quality verification and weighing, and that the same was mentioned in the course of search as well as subsequent enquiry. Learned counsel further submits that the emphasis by the assessing officer all through, was only on the discrepancy between the entries in the two registers which is genuinely in the realm of Central Excise Department and without even alleging that the quantity of steel representing the discrepancy was sold, attempt was made to levy penal tax. He submits that the Tribunal corrected the patent error committed by the assessing officer, and that no interference is warranted. The search in the premises of the respondent was conducted on 25-03-1999 and the only material on the basis of which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the search, can by no means be brought under the purview of Section 132(4) of the Act. Further, it becomes doubtful as to whether RG-1 register and DRPR which are referable to the Central Excise Act and the rules made thereunder, can be treated as books of account mentioned in Section 132(4) of the Act. Assuming them to be so, the statement fails to qualify the test under the provision on the first count itself. Added to that, the statement was almost in the form of an answer to a question. The answer was not in the form of any voluntary disclosure. It was to the effect that since the facts suggested in the question cannot be explained instantly, the assessee had agreed to offer the value of the material at ₹ 35,00,000/- as un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the discrepancy. Even if necessary latitude is shown regarding the power of the assessing officer to make the block assessment, what would have constituted the basis, is the suppression of sale proceeds of a product. The mere production of a material, even if not reflected in a register, does not constitute the basis to levy the central excise duty, leave alone income tax. While excise duty becomes payable when the manufactured material is removed from the factory, the income tax becomes payable when the product is sold and sale proceeds accrue to the assessee. When it was not even alleged that the steel, representing the differential quantity, was sold, there was no basis to infer or imagine the accrual of income or the corresponding ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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