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TMI Blog2015 (7) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore the addition cannot be added back? ii) Whether the tribunal was correct in holding that the addition of Rs. 8,14,907/- was made on the corresponding unaccounted sale and not based on any materials other than the documents seized? iii) Whether the tribunal was correct in holding that the addition of Rs. 21,28,815/- made against receivable/debtors cannot be added back as the Assessing Officer had not established by examining the person shown in the papers to corroborate the same?" 3. The appeal in I.T.A.No.81/2008 was admitted on 06.06.2011 to consider the following substantial questions of law: "1. Whether the finding of Tribunal in deleting the addition made by the Assessing Officer of Rs. .5,69,878/- and Rs. .1,52,832/- based on various loose sheets of papers, (117 in number) marked as ARW/6, is perverse and arbitrary and unsustainable in law? 2. Whether the finding of the Tribunal that a sum of Rs. .13,84,050/- is liable to be deleted, is perverse and arbitrary and contrary to law?" 4. The case of the revenue in these appeals is that the respondents/assessees are in the business of wholesale liquor trading. A search was conducted under Section 132 of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n facts. Based on the admissions of S.Rudramuniyappa on oath that the assessees were not maintaining any cash book ledger other than a stock register which was also confirmed by the accountant, the Assessing Officer started correlating the figures and also collected information from the Commercial Tax Department with regard to the turn over declared by the assessees in respect of various concerns. Papers found during the search relate to the period between 09.01.2000 and 19.08.2000. Loose sheets and the yellow coloured file disclosed that the cash was received not only from various retail shops and bars, but also from various persons called Swamy, Shiva, Balraj etc., to whom assessees sold liquor on wholesale basis. In nutshell, what was found in the sheets and the yellow file was details of unaccounted sale to outside person like Shiva, Balraj, A.V.Ravi etc. and receipt of money from sisters concerns of S.Rudramuniyappa like M/s.Ravi Wine Traders, Vinayak Wines. In sum and substance, the amounts received represented the sales made by the assessees which were not brought on the record. Based on these figures, a total turn over for the period January 2000 to March 2000 was computed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od and the turn over of Rs. 48,41,150/- was arrived at. Invoices for sale of goods of Rs. 5,40,765/- were found during the search. Therefore, the said amount was deducted from unaccounted turn over of Rs. 48,41,150/- and the balance amount of Rs. 43,00,385/- was treated as unaccounted turn over and a margin of 7% applied on the turn over for the year 2001-02 and income on the undisclosed turn over was worked out at Rs. 3,01,027/-. The capital required for undisclosed turn over was estimated based on stock turn over ratio and the initial capital calculated at 10.6% worked out to Rs. 8,14,907/- and the same was brought to tax. 6. A proposition notice was issued to the assessee which was replied on 09.08.2002 and 16.08.2002, wherein the assessee disputed the estimated turn over for the year 2000-01. At the same time, the assessees were not able to establish that the turn over declared by him was correct. Assessing Authority made a fair and reasonable estimation. The documents found during the search also revealed that the assessees were due to receive money from various persons to whom the liquor was sold. Accounts were systematically maintained in the loose sheets with respect to ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Tribunal committed an error in holding that the addition of Rs. 5,38,145/- and Rs. 3,01,027/- based on the papers seized in the course of search were not corroborated by other evidence. He submits that Tribunal was also in error in holding that addition of Rs. 8,14,907/- was based on material other than the seized documents. He further submits that the view of the Tribunal with regard to the addition of Rs. 21,28,815/- against receivable is also erroneous. He submits that the search and seizure operation was conducted in the normal course of the official business. Respondent in ITA 81/2008, S.Rudramuniyappa has admitted on oath with regard to correctness of entries while answering the questions posed to him during the search. The details of entries found in the loose sheets were co-related with transaction held with sisters concerns. The purchase of Santro Car was also disclosed in the very loose sheets and the assessee has admitted that the said Car belonged to his brother. This is a sufficient circumstance to hold that the contents of loose sheets were correct. He further submits that though several opportunities were given, the assessees and the Chartered Accountant wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of search and that is a strong evidence to show that there was no unaccounted trading. It is to be noted that the respondent S.Rudramuniyappa in the reply statement has admitted with regard to several aspects including the Santro Car. The order of the Assessing Authority is cogent and well reasoned. Every minute detail is reflecting in the said order. In a case of search of seizure, the revenue may discover assessees' failure to account several transactions which ought to have been brought to tax. It is only in such circumstances that the provisions of search and seizure are invoked. Assessee took a definite stand that the entries found in the loose sheets were reflecting in the regular books. The assessees were given a fair and reasonable opportunity to substantiate their stand. Both the assessee and the chartered accountant failed to substantiate the same. There is no doubt with regard to the possession of documents in question. It is clearly recorded in the order of assessment that the partner S.Rudramuniyappa and the Chartered Accountant who accompanied him miserably failed to substantiate their claim. Further, the information gathered from the partner in the reply ..... X X X X Extracts X X X X X X X X Extracts X X X X
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