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TMI Blog2010 (4) TMI 1140X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax Department carried out a search and seizure operation u/s 132(1) on 18.11.1999 at the business premises of the assessee company and residential premises of the directors. During the course of search several receipts showing payment of Octroi duty amounting to ₹ 1,01,000/- on invoices value of ₹ 45,75,000/- were found. The summarised details of those receipts are given by the AO as under :- Date Receipt No. Description Checking time Amount octroi paid (Rs.) Invoice amount of goods (Rs.) Page no. of Annexure 20.7.99 8 Loose pan masala 7.00 pm 25,000(@2%) 12,50,000 1 20.7.99 9 Loose pan masala pan parag! 7.05 pm 19,000(@2%) 9,50,000 2 20.7.99 10 Loose pan masala 7.05 pm 19,000(@2%) 9,50,000 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the date of inspection by Octroi Department was ₹ 4,15,728/- while stock as per books as on 15.7.99 was ₹ 8,32,082/-. The relevant figures of the stock as per books as on 10.7.99 was ₹ 13,11,693/- and that on 31.3.1999 was ₹ 11,77,802/- only. 6. On the above basis assessee claimed that sum of ₹ 45,75,000/- could not be assessed as concealed income of the assessee in the block period. The AO, however, took the view that (i) Octroi duty payment of ₹ 1,01,000/- is not recorded in the books; (ii) there are no purchase bills matching with the invoices recorded in the octroi receipts dated 20.7.99; search of the I.T. Department was done on 18.11.99. Till then octroi duty payment of ₹ 1,01,000/- was not recorded in the books; (iv) there were newspaper cutting seized from the premises of the assessee placed at Annexure A-1 page 12 indicating that Shri Nilesh J. Kothari has been caught along with the goods in one Matador No.GJ-I.T.4698 and octroi duty of ₹ 1,00,000/- has been recovered from him; (v) there is a stock difference found when department conducted the search. The difference was as under :- Sr. No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following grounds :- (1) The octroi department had carried out only spot inspection as mentioned at the top of the receipts only on 17.7.99, whereas alleged purchases on which duty was paid was on 20.7.99. (2) The duty was charged on account of certain irregularities noticed at the books of accounts and on the basis of details furnished during the spot inspection. There is no material to show that any unaccounted purchases were made by the assessee. (3) No adverse remark has been made by the octroi department regarding unaccounted purchases. (4) Payment of octroi duty is the liability of the principals namely Kothari Products Ltd. and Kothari Pouches Ltd. The octroi duty was paid on behalf of these principals and accordingly debited to the account of principal companies. It is not the liability of the assessee company, (5) The copy of the sales-tax assessment order for F.Y.99-00 did not show any unaccounted purchases. 9. Once ld. CIT(A) held that there were no unaccounted purchases of ₹ 45,75,000/-, the profit thereon by presuming the sales outside the books could not be taxed. He accordingly deleted addition of ₹ 1,37,250/-also. 10. He confirmed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and accordingly addition of GP estimated by the AO was justified. 14. Regarding addition of ₹ 79,266/- ld. DR submitted that addition is justified because physical stock was found less. 15. Against this, ld. AR for the assessee submitted that octroi department has not found any specific item of purchases on which octroi duty was not paid. It was simply a charge of octroi duty by estimate on detection of certain irregularities. He submitted that spot inspection was carried on 17.7.99 whereas payment of octroi duty as per octroi receipt pertained to purchases made on 20.7.99. The octroi department was not specific as to in respect of which purchases it was charging the duty. The charge was simple by estimate and, therefore, it cannot be inferred that assessee had made purchases outside the books. The total stock as on the date of spot inspection was only around ₹ 4,15,728/-. There was no inspection on 20.7.99. Therefore, inference that octroi duty payment related to any unaccounted purchases on 20.7.99 was incorrect. Further the department has not brought out any additional material to show that assessee had made purchases outside the books. 16. The ld. AR furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat date 20.7.99 mentioned in the octroi receipt is the date of payment of octroi duty and not the date of alleged purchases without paying octroi duty. Since spot inspection was carried out on 17.7.99 and books and documents were examined by the octroi department, this impugned purchase could only be pertained to dates prior to 17.7.99. Where assessee fails to discharge the onus lying on him then AO will be within his right to infer that the impugned purchases are unexplained and, therefore, liable to be taxed under section 69. It is now well settled law that provisions of section 69 can be invoked while making the assessment under section 158BC . Support is derived from the decisions of Hon. Karnataka High Court in Bengatbava vs. CIT (2009) 318 ITR 276 (Karnataka), Rajendra Labotia vs. DCIT (2004) 266 ITR 621 (Raj) and H. Sahul vs. ACIT (2002) 258 ITR 266 (Mad). When the assessee failed to explain and reconcile the purchases on which octroi duty was charged the AO was justified in making the addition. The decision relied on by the ld. AR in M/s A. Ramanlal Co. s case (supra) is distinguishable on facts. In that case assessee had reconciled the purchases on which Octroi duty was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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