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TMI Blog2008 (10) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... lendra Kumar and Ashish Agrawal for the appellants. Rishi Raj Sinha for the respondent. JUDGMENT 1. M/s. Vimla Stores a firm deals in agricultural implements, diesel, G. I. pipes, paints, spare parts and hardware, etc. It has three partners, namely, Sri Jagdish Narain and his two brothers. The firm Vimla Stores, hereinafter referred to as the assessee filed return for the assessment year 1996-97 on August 31, 1996, declaring an income of Rs. 11,193 and seeking refund of Rs. 37,054. 2. On December 13, 1995, the Assessing Officer, Sasaram along with six Income-tax Officers conducted a survey at the business premises of the assessee under the provisions of section 133A of the Income-tax Act, 1961 (hereinafter referred to as "t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of being arrested by the police personnel and sealing of the business premises. 6. The Assessing Officer computed the assessment on a total income of Rs.8,74,200 consisting of business income of Rs. 3,74,200 and income of 5 lakhs from other sources under the provisions of section 69 of the Act. 7. Aggrieved by the order of assessment, the assessee preferred appeal before the Commissioner of Income-tax (Appeals) who reduced the Income from business from Rs. 3,74,200 to Rs. 50,000 and affirmed the addition of Rs. 5,00,000 (five lakhs) as income from other sources under the rovisions of section 69 of the Act. 8. Aggrieved by the same, the assessee preferred appeal before the Patna Bench of the Income-tax Appellate Tribunal (hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n making inventory of the goods Granting the benefits of margin of error, we are of the view that unexplained stock to the tune of Rs.3,00,000 was there at the business premises of the assessee. Taking into consideration that unexpected stock and the statement made by Jagdish Narain and the facts that a sum of Rs.40,000 was paid as an advance tax on December 18, 1995, we are of the view that a sum of Rs.3,00,000 only should be added to the income of the assessee as unexplained investment under the provisions of section 69 of the Act. We, therefore, order that a sum of Rs. 3,00,000 be substituted to the amount of Rs. 5,00,000 to the income of the assessee under the provisions u section 69 of the Act." 10. As regards the interest, the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest under section 234B in the absence of any order by the Assessing Officer in the order of assessment? 12. Mr. Ajay Kumar Rastogi appears on behalf of the assessee whereas the Revenue is represented by Mr. Rishi Raj Sinha. 13. Mr. Rastogi submits that the estimation of business income has to be based on some material. According to him, a sum of Rs. 50,000 as business income assessed by the Commissioner of the Income-tax (Appeals) as affirmed by the Tribunal is without any material. According to him, it is nothing but a guess work. In support of his submission, he has placed reliance on a judgment of the Privy Council in the case of CIT v. Laxmi Narain Badridas [1937] 5 ITR 170 and our attention has been drawn to the following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the business income of Rs. 50,000 estimated by the Commissioner of Income-tax (Appeals) and affirmed in appeal by the Tribunal is based on available materials. 16. Accordingly, our answer to the first question is in the affirmative, in favour of the Revenue and against the assessee and it is held that, in the facts and circumstances of the case, the Tribunal was justified in upholding the estimation of Rs. 50,000 under the head "Business income". 17. Mr. Rastogi, then submits that unexplained investment on the basis of inventory lacking credibility is not permissible. He submits that the Tribunal itself having found error in making the inventory of the goods, the finding rendered by it of investment of Rs.3,00,000, from other s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3,16,537 was found and on account of the marginal error in making the inventory, the Tribunal has reduced it to Rs. 3,00,000 under the head "Unexplained investment". 22. We are of the opinion that the marginal error in making the inventory will not make it incredible deserving its total rejection. 23. Now, referring to the decision of the Delhi High Court in the case of Bansal High Carbons P. Ltd. [1987] 165 ITR 243, the court on facts found that the search party either did not had the necessary time or the expertise to correctly assess the stock position. On facts it was found that the search was made and inventory prepared in slipshod manner. That is not the position in the present case and as such the judgment relied on is o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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