9911796707
TMI Blog1984 (7) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... nly 5,041 maunds but the total sales recorded up to that period was shown at 5,267 maunds. Thus, an excess stock of 226 maunds was shown This discrepancy was found after making reference to statements made by the assessee to the bank. The Income-tax Officer also looked into dhan kutai khata and discovered the discrepancy in the stock of rice and paddy. As there was no reasonable explanation for excess of sale of rice, the Income-tax Officer concluded that the assessee was having transactions outside the books and was making purchases which were not shown in the regular books of account. According to the Income-tax Officer, the assessee had not disclosed the purchase of paddy of about 4,500 maunds up to March itself and this fact of suppression of paddy was further corroborated by the unaccounted sales detected in rice account at 226 maunds and considering the average purchase of paddy at the rate of Rs. 147.60 per maund, he concluded that the investment in purchase of paddy outside the books of account came to about Rs. 66,420. The Income-tax Officer estimated that apart from this, the assessee must have more investment after the month of March and he, therefore, calculated the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee after the sales and, therefore, the money received from sale proceeds could have easily been invested by the assessee in the business outside the books. It was also pointed out that such additions made in the last two years were more than Rs. 90,000, but to be precise, it was Rs. 92,000 odd. There was nothing to show that this amount had been withdrawn or invested by the assessee in any other manner. It was, therefore, submitted that further addition of Rs. 90,000 in the relevant assessment year was not reasonable and the same should have been treated as covered by the additions made in the earlier years. On behalf of the Revenue, it was submitted that the assessee has been in the habit of having transactions outside the books of account and it was for this reason that the books of account were not produced. It was also submitted on behalf of the parties that there was nothing to show that the additions made in those years were available to the assessee in this year. The Tribunal held that the discrepancies in the paddy account and for the rice sales were clearly established which show that the transactions outside the books in paddy and rice accounts had been carried ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, the stock of paddy obtained by the assessee which has been kept out of the books is not likely to be large. "So, taking into consideration all the facts of the case, an addition of Rs. 90,000 is made on account of undisclosed purchase of paddy out of undisclosed fund." The Tribunal has taken special care to note that the money had come from undisclosed fund and has further recorded a finding of fact that such undisclosed fund was available to the assessee or might have been available to the assessee on account of additions made to the tune of Rs. 92,000 odd, out of which Rs. 65,000 had been added only in the just next (earlier) preceding year. The learned senior standing counsel vehemently contended that the money could not have been available to the assessee since there is nothing to show that the goods in relation to which additions have been made in the earlier years had already been sold. This argument, however, is fallacious since it had never been any one's case that those goods had not already been sold and funds did not come to the hands of the assessee. Since money had come, according to the assessing officer, out of the undisclosed fund and the Tribunal has held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, invited our attention to the cases of Dulichand Omprakash v. CIT [1978] 113 ITR 476 (Cal) and Premier Suppliers (P.) Ltd. v. CIT [1979] 120 ITR 633 (Cal), both the decisions being of the Calcutta High Court. These cases do lend support to the stand taken by the Tribunal taking into account the additions made during the previous years. The learned counsel for the assessee also invited our attention to the cases of CIT v. S. Nelliappan [1967] 66 ITR 722 (SC) and Anantharam Veerasinghaiah Co. v. CIT [1980] 123 ITR 457 (SC). It is not necessary for us, for the purpose of decision in this case, to go into the facts or proposition laid down in Anantharam Veerasinghaiah Co.'s case [1980] 123 ITR 457 (SC), because that was a case of cash credit and involved penalty proceeding under section 271(1)(c) of the said Act. It would, however, be relevant to take a note of what the Supreme Court has observed in that case at page 463 which runs thus: "Neither law nor human experience guarantees that an assessee who has been dishonest in one assessment year is bound to be honest in a subsequent assessment year. It is a matter for consideration by the taxing authority in each case whether ..... X X X X Extracts X X X X X X X X Extracts X X X X
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