9911796707
TMI Blog2002 (12) TMI 191X X X X Extracts X X X X X X X X Extracts X X X X ..... rded in the diary maintained by Maltiben Rs. 2,27,000 (7) Unaccounted sale of scrap Rs. 3,79,700 (8) Unaccounted income due to forfeiture of advance money received from M/s Mahendra Suitings Rs. 36,975 -------------- Rs.1,05,18,882 -------------- 2. The assessee firm derives income from manufacture and sale of textile machinery. A search and seizure operation was carried out on 8-9-1995 at the residential premises of the partners of the firm viz., S/Shri Ashwin B. Patel and Naresh B. Patel. A survey operation under section 133A was also carried out at the business premises of the assessee firm as well as its sister concern viz., M/s B & Brothers Machinery Mfg. Pvt. Ltd. The Authorised Officer recorded the statement of Shri Ashwin B. Patel-partner of the firm on 8-9-1995. Thereafter on receipt of intimation from the Jt. CIT, Special Range 4, Ahmedabad who held jurisdiction over the case of the partners, the Assessing Officer having jurisdiction over the case of the assessee firm, issued notice under section 158BD on the assessee requiring it to file the return for the Block Period 1-4-1985 to 8-9-1995. In response to the said notice, the assessee firm filed the return for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CST tax/Centrat Packing Ex. Packing Expenditure Expenditure (A) B=A*1.25 --------------------------------------------------------------------------------------- (1) (2) (3) (4) (5) (6) --------------------------------------------------------------------------------------- l. Shalu Dyeing 11-10-86 10,00,000 12,50,000 2,50,000 2. Advance Synthetics 26-3-87 12,91,000 16,13,750 3,22,750 3. Anjani Synthetics 27-11-90 14,01,000 17,51,250 3,50,000 4. Guera Synthetics 31-8-90 17,56,000 21,95,000 4,39,000 5. Karnavati Synthetics 28-2-93 26,07,500 32,59,375 6,51,875 6. Sangam Processors 25-3-91 20,97,837 26,22,296 5,24,459 7. Digvijay Synthetics 28-9-91 20,00,000 25,00,000 5,00,000 8. Gauhati Cotton Mills 25-2-92 23,64,500 29,55,625 5,91,125 9. Aspief Textile Prints 30-3-92 17,00,000 21,25,000 4,25,000 10. York Fabrics 7-2-93 16,59,000 20,73,750 4,14,750 11. Rama Ra u Surgicals 16-8-93 16,53,000 20,66,250 4,13,250 12. Trim Exports 7-9-93 11,71,000 14,63,750 2,92,750 13. Dayaram Ptg.& Dyeing 29-11-93 19,73,264 24,66,580 4,93,316 14. Paras Fab. & Dyeing 18-5-94 14,61,000 18,26,250 3,65,250 15. Chamunda Textile 13-3-95 20,25,000 25,31,250 5,06,250 --------- To ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer made a further addition of Rs. 3,79,700 on account of alleged unaccounted sale of scrap as per discussion given in para 5 of the assessment order. The Assessing Officer made a further addition of Rs. 36,975 on account of forfeiture of advance money received by the assessee given by M/s Mahendra Suitings for sale of machinery which that party subsequently refused to buy. The Assessing Officer accordingly completed the assessment at undisclosed income of Rs. 1,05,18,882 vide order dated 28-1-1999. 13. Aggrieved with the said order, the assessee has filed this appeal. Shri S.N. Divatia, the learned AR of the assessee pleaded that, no doubt, Shri Ashwin B. Patel, during the course of recording of statement by the Authorised Officer under section 132(4) has admitted the factum of under-invoicing of sales in respect of four parties but that does not mean that the sale transactions relating to all other parties were also not properly recorded in the books of account and those were also under-invoiced. It was submitted that Shri Ashwin B. Patel has stated before the Authorised Officer that he will have to verify the relevant files which were found during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espect of these purchases. Reliance was placed on the decision of the Ahmedabad Bench of the Tribunal in the case of Ruby Builders v. ITO [1999] 63 TTJ (Ahd.) 202. 13.3 Coming to the addition made on account of alleged unaccounted sale of scrap, it was submitted that these were shown at Rs. 1,60,671 in the P&L Account for three years. Accordingly, it was pleaded that there was no justification for making any further addition on account of unrecorded sales of scrap and in any case the addition made by the Assessing Officer is highly excessive based on unrealistic estimate. 13.4 As regards the addition on account of credits in Smt. Maltiben's diary, it was submitted that the Assessing Officer has not properly considered the explanation given by the assessee in its letter dated 24-12-1998. In any case it was submitted that the credits introduced in the diary are out of admitted cash receipts on account- of under-invoicing and the assessee should be allowed the benefit of telescoping of this addition with the addition which is required to be made on account of under-invoicing in relation to four parties conceded by the assessee. 13.5 As regards the addition of Rs. 36,975 on account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd sale of textile machinery and Shri Ashwin B. Patel-partner of the assessee firm has admitted during the course of recording of statement under section 132(4) that the firm has charged on money in respect of four parties mentioned in para 4 above to the extent of Rs. 9,77,000. However, the case of the assessee before us is that merely because the assessee has charged on money in respect of four sale transactions, it cannot be held that the assessee must be charging on money in respect of every other transaction noted by the Assessing Officer in the assessment order. The charging of on money in respect of four parties is admitted by the assessee and has also been proved by the inquiries conducted by the Assessing Officer from the buyers of machineries. However, in respect of the remaining parties mentioned at page 7 of the assessment order (which have been noted by us in para 7 above) and also in respect of parties to whom the machines other than Stenter Machines were sold (as noted by the Assessing Officer at pages 8 and 9 of the assessment order which we have also reproduced in para 9 of this order), the Assessing Officer has not been able to prove that the purchasers of these m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee under section 143(3) or 144 for the relevant assessment years. However, no addition can be made by invoking the provisions of section 145 by estimating undisclosed income which is required to be computed in accordance with the provisions contained in Chapter XIV-B of the Act. Our above conclusion is supported by the view of the Hon'ble Gujarat High Court in the case of N.R. Paper & Boards Ltd. v. Dy. CIT [1998] 234 ITR 733. However, as far as the receipt of "on money" in respect of four parties mentioned in paras 4 and 5 of this order is concerned, we will uphold the action of the Assessing Officer in taxing the amount of Rs. 9,77,000 as the undisclosed income of the assessee. Accordingly, ground of appeal No. (1) is dismissed whereas ground of appeal Nos. (2) and (3) are allowed. 16. Coming to ground of appeal No. (4), the dispute is with regard to the addition made by the Assessing Officer on account of alleged unaccounted sale of machinery due to stock deficit found at the time of survey. The Assessing Officer has worked out the value of stock on the date of survey i.e., 8-9-1995 by adopting a GP stated to be earned by the assessee by Shri Ashwin B. Patel in the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by it on selling the alleged stock. The above view finds support from the decision of the Tribunal in the case of Abhishek Corporation, reference application against which was rejected by the Tribunal vide R.A. No. 869/Ahd./1997 and even the petition under section 256(2) filed by the revenue was rejected by the Hon'ble Gujarat High Court in [2000] 158 CTR 374 (Guj.). This ground of appeal is partly allowed. 17. The next ground of appeal relates to the addition made by the Assessing Officer on account of investment of Rs. 13,59,000 on account of alleged unrecorded purchases as per discussion contained in para 3 of the assessment order. The contention of the assessee before us was that there was no unrecorded purchase as per detailed explanation given by the assessee vide letters dated 21-12-1998 and 24-12-1998 copies of which have been given to us at pages 124 to 139 of the paper book. However, the assessee has taken an alternative plea that even if it is assumed for argument's sake that there has been unaccounted investment in the purchase, the same is required to be taxed under section 69C and accordingly deduction of an equivalent amount has to be allowed under section 37 becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the assessee has received a sum of Rs. 9,77,000 on account of "on money" on sales of machines to four parties and the benefit of telescoping is allowable to the assessee in view of the decision of the Hon'ble Supreme Court in the case of Anantharam Veerasinghaiah & Co. v. CIT [1980] 123 ITR 457. Accordingly, the addition of Rs. 2,27,000 made by the Assessing Officer on account of credits recorded in the diary maintained by Smt. Maltiben, is directed to be deleted. This ground of appeal is allowed. 19. The next ground relates to the addition of Rs. 3,79,700 on account of alleged unrecorded sale of scrap. The addition has been made by the Assessing Officer on the basis of diaries maintained by both the partners of the firm S/Shri Ashwin B. Patel and Naresh B. Patel and on the basis of those diaries the Assessing Officer has worked out the addition of Rs. 2,44,700 and also included Rs. 1,35,000 on account of unaccounted sale of scrap for a period of nine years on the basis of Rs. 15,000 per year. We have considered the rival submissions. It is undisputed that the assessee admitted Lochru receipts of Rs. 13,000 and Rs. 52,500 for assessment years 1992-93 and 1994-95 which has not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The grounds raised by the assessee in this appeal are as under The learned DCIT has grievously erred in law and/or on facts in making following additions as undisclosed income- (1) Admitted unaccounted income due to under invoicing of bills Rs. 9,77,000 (2) Unaccounted income due to under-invoicing of machinery Rs. 55,63,255 (3) Unaccounted income due to under-invoicing of machinery Rs. 13,36,982 (4) Unaccounted sale of machineries due to stock deficit Rs. 6,39,000 (5) Unaccounted purchase of materials Rs. 13,59,000 (6) Unaccounted income on account of various credits recorded in the diary maintained by Maltiben Rs. 2,27,000 (7) Unaccounted sale of scrap Rs. 3,79,700 (8) Unaccounted income due to forfeiture of advance money received from M/s Mahendra Suitings Rs. 36,975 ------------- Rs. 1,05,18,882 ------------- 3.1 The assessee firm derives income from manufacture and sale of textile machinery. A search and seizure operation was carried out on 8-9-1995 at the residential premises of the partners of the firm viz., S/Shri Ashwin B. Patel and Naresh B. Patel. A survey operation under section 133A was also carried out at the business premises of the assessee fir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h cash was taken. In reply to question No. 20 of the statement recorded under section 133A of the IT Act, Shri Ashwinbhai B. Patel admitted to have received the following cash from following parties on account of under-invoicing of sales bills: Name of the party Amount taken in cash M/s Anjani Synthetics Rs. 2.50 lakh M/s Shalu Dyeing & Ptg. Mills Rs. 2.00 lakh M/s York Fashion Mills Rs. 3.00 lakh M/s Dayaram Ptg. & Dyeing Mills Rs. 2.00 lakh. 7. Subsequently, the Assessing Officer recorded the statement of Ram Bhagat Sarogi, the Director of M/s Anjani Synthetics, who stated in response to question Nos. 4, 5 and 6 that he had paid Rs. 2,77,000 in cash against the supply of Stenter machine on 27-12-1990 to Shri Ashwinbhai B. Patel on account of under-invoicing of sale bill of Stenter machine and related parts. 8. In addition to the above, the Assessing Officer found that the corroborative evidence in the form of cash received from the above parties was recorded in the various loose papers seized/impounded from the residence of the partners of the firm --------------------------------------------------------------- Referred loose papers Nature of description/ transaction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ----------------------------------- Sr. Date of Name of the Type of Sale Bill A. Y No. sale party machine Amount(Rs.) -------------------------------------------------------------------------- 1. 27-12-90 Anjani Synth. 5 Ch. Pin & Clip 15,15,000 91-92 Stenter + 3BPM 2. 11-10-86 Shalu Dyeing, Hot Air Stent. 10,96,000 86-87 Surat. M/C + 3BPM 3. 7-2-93 York Fabrics 3 Ch. Pin & Clip 18,10,254 93-94 Stenter + 3BPM 4. 29-11-93 Dayaram Ptg. 5 Ch. Pin & Clip 21,80,122 94-95 & Dyeing Mills Stenter + 3BPM -------------------------------------------------------------------------- 12. The assessee vide letter dated 21-12-1998 was required to show cause as to why total cash receipt of Rs. 9.77 lakh shall not be treated as unaccounted income/concealed income on- account of under-invoicing of sale bills to following parties for supply of Stenter machines: Name of the party Amount M/s Anjani Synthetics Rs. 2,77,000 M/s Shalu Dyeing & Ptg. Mills Rs. 2,00,000 M/s York Fabrics/York Fashion Rs. 3,00,000 M/s Dayaram Dyeing & Ptg. Mills Rs. 2,00,000 ------------ Total Rs. 9,77,000 ------------ 13. In response to the letter dated 21-12-1998 mentioned above, the assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s at a bill price (before Sales-tax and Central Excise) of Rs. 23,64,000. On the other hand, similar machine having similar specifications was supplied to M/s Digvijay Synthetics at a basic billed price of Rs. 20,00,000. This kind of variation in the billed price in respect of similar machines without any reasonable cause was found in all other transactions. Regarding the variation in the billed price of similar machines, the assessee could not give any plausible explanation. 14.1 As discussed above in preceding para, Shri H.A. Patel, Technical Executive stated that 10 per cent to 30 per cent of sale price was taken in cash and balance is taken by cheques. 15. In the course of search action in response to question Nos. 46, 47 and 48 of the statement recorded on 9-9-1995 the assessee had categorically stated that he had received the cash in respect of the number of parties in addition to the four parties in which specific quantum of concealment was admitted by him. The Assessing Officer observed that the assessee did not give the quantum of concealment in respect of other parties only to avoid payment of tax in respect of concealed income during the entire block period, Taking int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 as stated above and the same was added to the total income of the assessee vide para 1.5 of the assessment order. Therefore, additional concealment of Rs. 55,63,025 (Rs. 65,40,025 - Rs. 9,77,000) was added to the total income of the assessee due to under-invoicing of sales in respect of 15 parties as stated above in addition to Rs. 9,77,000 added separately. 17. The Assessing Officer also observed the concealment on account of under-invoicing of sales of machinery by the assessee other than the Stenter machines. The Assessing Officer observed in paras 1.2 to 1.5 of the assessment order that the assessee himself admitted to have concealed income on account of under-invoicing of sales of machinery. As discussed in para 1.6 of his order, Technical Executive of the assessee firm Shri H.A. Patel in response to question No. 11 of the statement recorded under section 131 on 9-8-1995 has categorically stated that 10 per cent to 30 per cent of the sale price of the machinery was taken in cash and the balance is taken by cheques. Further during the course of search in response to question Nos. 46, 47 and 48 of the statement recorded on 9-9-1995 the assessee has categorically stated that h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enter machines is Rs. 13,36,982. Since the assessee admitted to have received the cash from the above parties and due to the fact that the Technical Executive of the assessee firm admitted to have stated that the assessee has taken cash between 10 per cent to 30 per cent of the sale price, the Assessing Officer held that the assessee has concealed income of Rs. 13,36,982 due to sale of machinery on account of under-invoicing of the sales in addition to the concealment worked out at paras 1.5 and 1.6 of the assessment order and the same was added to the total income of the assessee. 18. The abovestated three additions were opposed vide ground Nos. 1 to 3 of appeal before us wherein it was pleaded that no doubt Shri Ashwin B. Patel during the course of recording of the statement by the Authorised Officer under section 133 has admitted the factum of under-invoicing of sale in respect of four parties but that does not mean that the sale transactions relating to all other parties were also not property recorded in the books of account and those were also under-invoiced. It was submitted that Shri Ashwin B. Patel had stated before the Authorised Officer that he will have to verify the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice shown in the invoice. The learned DR relied on the decisions in Laxmi Vilas Bank Ltd.'s case and CST v. H.M. Esufali H.M. Abdulali [1973] 90 ITR 271 (SC). 20. The assessee firm is engaged in the business of manufacture and sale of textile machinery. Shri Ashwiii B. Patel, partner of the assessee firm admitted during the course of recording of the statement under section 133A that the assessee has charged on money in respect of four parties mentioned in para 13 of this order to the extent of Rs. 9,77,000. Shri Ashwin B. Patel clearly admitted to have received the following cash from the following parties on account of under-invoicing of sale bill: Name of the party Amount taken in cash M/s Anjani Synthetics Rs. 2.50 lakh M/s Shalu Dyeing & Ptg. Mills Rs. 2.00 lakh M/s York Fashion Mills Rs. 3.00 lakh M/s Dayaram Ptg. & Dyeing Mills Rs. 2.00 lakh 21. Subsequently, the Assessing Officer recorded the statement of Ram Bhagat Sarogi, the Director of M/s Anjani Synthetics, who stated in response to question Nos. 4, 5 and 6 that he had paid Rs. 2,77,000 in cash against the supply of Stenter machine on 27-12-1990 to Shri Ashwinbhai B. Patel on account of under-invoicing of sale b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... similar machines without any reasonable cause was found in all other transactions and the assessee could not give any plausible explanation regarding the variation in the billed price of similar machines. In view of the above discussions, Rs. 9,77,000 received as on money from M/s Anjani Synthetics, M/s Shalu Dyeing York Fashion and Dayaram Ptg. & Dyeing Mills is added in the income of the assessee as undisclosed income. This addition has been confirmed by the Hon'ble Accountant Member in his order with which I respectfully agree with the observation that the entire reason and basis given for sustaining this addition equally supports the addition of Rs. 55,63,255 and Rs. 13,36,982 made by the Assessing Officer vide ground Nos. (2) and (3). 22. Besides on money received in respect of four parties mentioned above, the Assessing Officer found that the assessee had under-invoiced the sale price of machinery in almost every Stenter machines supplied by it in addition to what was originally admitted during the course of search. Shri H.A. Patel, Technical Executive of the firm in his statement admitted that the assessee is actually under-invoicing the Stenter machines and receiving 10 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at he had received cash in respect of sale of machineries other than Stenter machines sold to other parties in addition to four parties as discussed in para 1.5 of the assessment order in which specific quantum of concealment was admitted by him. The assessee has failed to give specific quantum of cash received due to under-invoicing of sale price of machinery except in respect of four parties only to avoid payment of tax. 24. On the parity of reasoning given for confirming addition of Rs. 55,63,025, I am of the considered opinion that the Assessing Officer has also rightly made the addition of Rs. 13,36,982 as undisclosed income by estimating on money received on sale of machines other than Stenter machines. In view of elaborate facts discussed in the assessment order and in the foregoing paragraphs, the aforesaid addition made by the Assessing Officer is held to be justified. 25. The learned counsel appearing on behalf of the assessee placed heavy reliance on the judgment of the Hon'ble Gujarat High Court in the case of N.R. Paper & Boards Ltd. The said decision does not in any manner help the assessee, as the Hon'ble Gujarat High Court has held in the aforesaid case that incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y should not be vindictive or capricious. If the estimate made by the assessing authority is a bona fide estimate and is based on a rational basis, the fact that there is no good proof in support of that estimate is immaterial. Prima facie, the assessing authority is the best judge of the situation. It is his best judgment and not any one else. The High Court cannot substitute its best judgment for that of the assessing authority. Held also, that penalty of Rs. 2,000 imposed on the footing of the revision of the amount of turnover for the whole year was justified." 27. In view of the above facts and circumstances, I am of the view that the additions of Rs. 55,63,025 and Rs. 13,36,982 have been rightly made by the Assessing Officer and I uphold the order of the Assessing Officer in relation to ground Nos. (2) and (3). Hence ground Nos. (2) and (3) of the appeal are rejected. ORDER UNDER SECTION 255(4) OF I.T. ACT, 1961. As there is difference of opinion between the two members who heard the appeal in IT(SS)A No. 2/Ahd./1999 for the block period 1-4-1985 to 8-9-1995, we refer the same of the Hon'ble President, I.T.A.T. for furlhciaction as provided under section 255(4) of I.T. Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to frame difference of opinion and referring the same to the Hon'ble President, ITAT, for further action as provided under section 255(4) of the IT Act, 1961. Point of difference proposed by Judicial Member is as under: Q. "Whether on the facts and in the circumstances of this case, the view of the Judicial Member that addition on account of under invoicing of Stenter machinery to the extent of Rs. 55,63,025 and under-invoicing of other machinery to the extent of Rs. 13,36,982 is justified on the basis of (i) statement of Shri Ashwin B. Patel, partner of the assessee firm, (ii) Shri H.A. Patel, Technical Executive of assessee firm, coupled with (iii) admission of few purchasers and (iv) notings on loose papers seized during the search operation from the residence of partners of assessee firm, particularly on the basis of which this Bench has already sustained additions of Rs. 9,77,000?" OR Point of difference suggested by the Hon'ble Accountant Member is as under: Q. "Whether in the facts and circumstances of the case, the view of the Accountant Member that no addition on account of alleged undisclosed income due to alleged under-invoicing of Stenter machinery to the extent of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under-invoicing of Stenter machinery to the extent of Rs. 55,63,025 and under-invoicing of other machinery to the extent of Rs. 13,36,982 is justified on the basis of (i) statement of Shri Ashwin B. Patel, partner of the assessee firm, (ii) Shri H.A. Patel, Technical Executive of assessee firm, coupled with (iii) admission of few purchases and (iv) notings on loose papers seized during the search operation from the residence of partners of assessee firm, particularly on the basis of which this Bench has already sustained additions of Rs. 9,77,000?" OR Point of difference suggested by the Hon'ble Accountant Member is as under: Q. "Whether in the facts and circumstances of the case, the view of the Accountant Member that no addition on account of alleged undisclosed income due to alleged under-invoicing of Stenter machinery to the extent of Rs. 55,63,025 and alleged undisclosed income due to under-invoicing of machinery other than Stenter machinery to the extent of Rs. 13,36,982 made by the Assessing Officer under Chapter XIVB cannot be sustained in absence of any specific material brought on record by the Assessing Officer that the assessee has in fact received any "on money" ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng at an average of 2096 in respect of the total sales of machineries since according to the statement of Shri H.A. Patel normal under-invoicing indulged in by the assessee firm varied from 10 per cent to 30 per cent of the sale price. As a result of the aforesaid, the Assessing Officer estimated under-invoicing in repect of 15 parties to whom sales were made by the assessee in the block period at Rs. 65,40,025 and details thereof appear at page 4 of the order of the ld. Accountant Member. As the assessee had admitted unaccounted receipts of Rs. 9.77 lakhs in respect of four of the parties, the Assessing Officer made an addition of Rs. 55,63,025 (Rs. 65,40,025--Rs. 9,77,000) 7. Considering the same facts as aforesaid, the Assessing Officer made a further addition of Rs. 13,36,982 on account of under-invoicing of machines other than Stenter machines and details of such sales effected to six parties appear in para 9 at page 5 of the order of the Ld. Accountant Member. 8. On the matter travelling to the Tribunal, the assessee's counsel contended that although Shri Ashwin B. Patel during the course of recording of his statement under section 132(4) had admitted the factum of under-in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dmitting that under-invoicing of sale price ranged from 10 per cent to 30 per cent. On the basis of the aforesaid submissions, the ld. DR supported the action of the Assessing Officer. 11. The ld. Accountant Member who wrote the initial order at the outset noted the admission of Shri Ashwin B. Patel, Partner of the assessee firm about the receipt of a sum of Rs. 9.77 lakhs in cash outside the books of account due to under-invoicing but considering the facts of the case as brought out on record, he recorded a finding to the effect that the Assessing Officer had not been able to prove that the purchasers of machines other than the four listed at page 3 of his order had paid any "on money" in cash to the assessee over and above the invoice price noted by the Assessing Officer while supplying machines to the respective purchasers. The assessee's counsel in fact was able to place before the Division Bench the copies of the correspondence entered into between the Assessing Officer and the numerous other parties except the four in respect of which "on money" receipts of Rs. 9.77 lakhs were admitted. It was noted by the ld. Accountant Member that the Assessing Officer had called for infor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een taken over and above the sale bill price and question No. 5 in the recording of his statement was relevant; (ii) In response to question Nos. 7, 8, 10, 11, 13 and 20 of the statement recorded on 8th September, 1995, the assessee admitted having received in cash over and above the sale bill price; (iii) Shri Ashwin B. Patel, Partner stated that he could identify the instances where cash was taken over and above the sale price and in reply to question No. 20 of the statement recorded under section 133A of the I.T. Act, 1961, Shri Ashwin B. Patel admitted receiving cash from the four parties on account of under-invoicing of sale bills; (iv) The Assessing Officer recorded the statement of Shri Ram Bhagat Sarogi, Director of Anjani Synthetics who stated in response to certain questions that he had paid Rs. 2.77 lakhs in cash against the supply of Stenter machine on 27-12-1990 to Shri Ashwin B. Patel. (v) The Assessing Officer referred to corroborative evidence in the from of loose papers seized/impounded from the residence of the Partners, of the firm, which proved receipt of cash to the tune of Rs. 9.77 lakhs as against Rs. 9.50 lakhs admitted during the course of recording of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lakshmi Vilas Bank Ltd. and H.M. Esufali H.M. Abdulali. 15. Beginning para 20 of his order at page 29 and going up to the end or para 22 at page 32 of his order, the ld. Judicial Member discussed at length the addition of Rs. 9.77 lakhs, which had been confirmed by the ld. Accountant Member and a close reading of this part of his order clearly shows that he is in full agreement with the ld. Accountant Member in confirming the addition of Rs. 9.77 lakhs but now comes the point of difference when he observes that the various reasons and the basis given for sustaining the addition of Rs. 9.77 lakhs equally supports the additions of Rs. 55,63,255 and Rs. 13,36,982 made by the Assessing Officer. According to the Id. Judicial Member the Assessing Officer had found that the assessee had under-invoiced the sale price of machineries other than those in respect of which the under-invoicing had been admitted during the course of search. Much reliance was placed on the statement of Shri H.A. Patel Technical Executive of the firm wherein he is purported to have stated that 10 per cent to 30 per cent of the sale price was received in the form of cash. The ld. Judicial Member relied heavily on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions had taken place in the years 1986 to 1994 and most of these pertained to periods when the said Shri Hiralal Patel was not even in the employment of the assessee; (iii) A perusal of the statement of Shri Hiralal Patel more particularly the answers to Question Nos. 1, 5, 6, 7, 9 and 11 would show that he was not aware about the final sale price decided with the customers by Shri Ashwin Bhai and therefore his statement could not be relied upon to hold that the assessee had indulged in under-invoicing; (iv) In response to Question No. 14, Shri Hiralal Patel had stated that wherever the invoice value was less than the cost price then cash might have been received whereas the material on record clearly showed that the assessee firm had charged much more than the cost price and therefore the theory advanced by Shri Hiralal Patel did not hold good; (v) The Assessing Officer had called for information from various parties under section 133(6) and the result of such verification had shown that the said customers had recorded the same sale price as shown in the assessee's sales invoice and not a single customers had confirmed receiving extra sale price over and above the invoice value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence in specifications as also various other factors like extra items, change in design etc.; (xvii) It was not correct to state that the assessee was involved in wrong classification of machinery since even in an order dated 19-12-2000 passed subsequent to the search by the Excise Authorities, no such allegation had been made and in any case there was no material in support thereof, and (xviii) The provisions of section 145 were not applicable in the case of a block assessment and the judgment of the Hon'ble Supreme Court in the case of CST Madhya Pradesh v. H.M. Esufali H.M. Abdulali [1973] 90 ITR 271 was not applicable. 17. In support of his numerous arguments and more so in support of the view expressed by the ld. Accountant Member, the ld counsel for the appellant placed reliance on the same very decisions as cited in IT(SS)A No. 45/Ahd./99 being the case of the sister concern i.e., M/s Babros Machinery Manufacturing Private Limited heard along with the present reference and since disposed of. To mention some of these N.R. Paper & Boards Ltd.'s case CIT v. Dr. M.K.E. Memon [2001] 248 ITR 310 (Bom.), CIT v. Rajendra Prasad Gupta [2001] 248 ITR 350 (Raj.) Samjrat Beer Bar v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 145 to a block assessment, the applicability of the judgment of the Hon'ble Supreme Court in the case of H.M. Esufali H.M. Abdulali as also the applicability or otherwise of various other decisions relied upon by both the parties in the case of the sister concern and which are also cited in the present reference. I have already dealt within detail the various decisions relied upon by the parties while disposing of the reference under section 255(4) in the case of the sister concern and my observations would therefore apply in the present reference as well. Coming to the facts of the present case, the ld. Accountant Member while sustaining the addition to the tune of Rs. 9.77 lakhs deleted the other two additions of Rs. 55,63,255 and Rs. 13,36,982 on the following main grounds: (1) That Shri Ashwin B. Patel, Partner of the assessee firm had admitted during the course of recording of his statement under section 132(4) that "on money" had been charged in respect of four parties aggregating Rs. 9.77 lakhs but this by itself could not lead to the conclusion that "on money" had been charged in respect of every other transaction noted in the assessment order; (2) The cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulali but which in my opinion is not applicable. The ld. Judicial Member has no doubt written a detailed order but he has not countered any of the factual observations made by the ld. Accountant Member more so the one's which I have already summarized in para 21 of the present order. 24. Coming to the statement of Shri Hiralal Patel, it is quite apparent from a perusal of the record and not rebutted before me by the ld. DR on behalf of the Department that he was employed by the assessee only on 11-11-1991 and most of the transactions in respect of Stenter machines as also the other machines pertained to periods when he was not an employee of the assessee. It is also not countered before me on behalf of the Department that the duties of the said person as emerging from his own statement related to two areas other than the involvement and discussion with the clients about the price fixation in respect of various types of machineries. In addition to the aforesaid, there is no counter by the Department of the factual submission made on behalf of the assessee that the invoice value in each of the cases was more than the cost price. 25. I have perused minutely the statements recorded i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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