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TMI Blog1986 (2) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... lised in the other two assessees, cases. The appeals were argued in common and, therefore, all these appeals are considered together and disposed of by a common order. 2. We may refer now to certain relevant facts. All the three persons are assessed in individual status and carried on separate proprietary business of manufacture of cloth under different names. The accounting period followed in all the three cases is financial years. The books of accounts and prescribed registers for the disbursement of wages were maintained in all the three cases. Shri Prem Mehra lived with his father Shri Parkash Chandra Mehra. 3. Search operations were carried on in the premises of all the three assessee on 12th Aug., 1975, a date falling in the financial year 1975-76 relevant to the asst. yr. 1976-77. The ITO in the case of Shri Parkash Chandra Mehra states in the assessment order for the year 19975-76 about the discovery of some undated signed cash vouchers and agreement of employment of M/s Diamond Woollen Mills with an employee Shri Jaswinder Singh at his premises. In the case of Smt. Karuna Kapoor, the ITO mentions in the assessment order of the year 1975-76 about finding in search cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after joining the service of M/s. Amristar Woollen Mills for the period April, 1975 to Dec., 1975 and above all the circumstances in which his earlier statement was recorded by the ITO sometimes in 1976. After that statement the ITO examined Shri Jasminder Singh again on 28th March, 1979 and both the ITO and Shri Prem Mehra examined and cross-examined him. It is after that the assessment of the year 1976-77 was completed on 30th March, 1979. 4. The ITO's conclusion recorded in the assessment order of the year 1975-76 were two. Firstly, the instance of Shri Jaswinder Singh as discussed and the circumstantial evidence of "blank" signed undated cash vouchers" went to indicate that the assessee had been inflating his expenses in order to reduce his income and secondly the assessee was meeting expenses from income not disclosed to the Department. The ITO on the basis of details of salary furnished by the assessee in respect of Shri Jaswinder Singh and the salary admitted by him to have been received as per his first statement concluded that expenses had been inflated by about 40 per cent in respect of the wages and weaving charges shown at Rs. 44,741 and Rs. 68,291. The addition was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion details of any such vouchers being found in the case of Shri Parkash Chandra Mehra. The ultimate conclusion for the assessment year was that from the blank unfilled vouchers and the fact that Shri Jaswinder Singh had been paid less than the amount debited in the cash book it came out that the assessee had been inflating expenses in order to reduce the income and an estimate of Rs. 40,000 was made keeping in view the addition made in the earlier year. 5. The basis of additions made in the case of Shri Parkash Chandra Mehra was adopted in the two assessment of Smt. Karuna Kapur and on estimate an addition of Rs. 20,000 was made in each year attributing it to inflation in expenses without specifying any particular heads of expenditure. However in the assessment order of the year 1975-76 the ITO gave the names of 11 persons the cash vouchers in respect of whom were found in search. No amount was indicated in respect of any vouchers which only show that the vouchers were carrying signatures and did not bear any date or amount. In the assessment order of Shri Prem Mehra for the year 1975-76 particulars about the name of 10 persons in respect of whom blank vouchers were found were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts are there to discredit the conclusion of the ITO, whose approach has been based on both ignoring the relevant facts and the principles for making an additions of the kind made. The search was on 12th Oct., 1975. The vouchers found were undated and bearing three instances noted in the assessment order of Shri Prem Mehra did not show any amounts and merely carried the signatures. In the case of Shri Parkash Chandra Mehra no particulars of the vouchers seized are at all relied upon and the whole case turned on the difference allegedly found between the salary paid to Shri Jaswinder Singh. Weaving Master for the period of six months. Oct., 1974 to March, 1975 and the amount of difference Rs. 100 will be Rs. 600 only. The statement of Smt. Chand Rani in his case has been twisted, as we will refer to later, to say that she did not know finally what amount was filled in some vouchers, which was not filled in at the time of getting her signatures. Her statement as a whole has not been read correctly. A peculiar conclusion is drawn that no cash vouchers copy was received by the persons signing cash vouchers. This is a totally unknown procedure in the world of commerce. Shri Jaswinder Si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... un-reliable. In the case of Shri Parkash Chandra Mehra only one worker Smt. Chand Rani was examined and when we read her evidence there is nothing which whill go to support the Revenue. In fact, the assessee's counsel, Shri Sudarshan Kapoor repeatedly said that in the case of all the three assessee no discrepancy was found either in stocks or cash held or in jewellery and no addition was made in these cases on any of these counts. It is significant to note that no undisclosed cash was discovered in searches and no such addition has been made. The only slender thread with which the story of the Revenue bangs is the testimony of Smt. Chand Rani and the discrepancy of Rs. 600 allegedly found about the salary of Shri Jaswinder Singh on the basis of his first statement recorded by the ITO on 30th Aug., 1976. The vouchers are dumb and no efforts has been made to make them speak by recording the testimony of persons signing the vouchers. The assessees have given an explanation about the vouchers that they were used for making advances in the course of the month to the workers and these advances were deducted at the time of paying the salary of the month and the vouchers destroyed. The on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing knowledge about the advance amount given to them and the assessee filling in the amounts as they liked. The conclusion about supplying of copy of cash voucher to a worker is too absurd to need any comment. Now coming to the testimony of Shri Jaswinder Singh the position in law was that his statement recorded on 30th Aug., 1976 could not be used against the assessee. Shri Parkash Chandra Mehra even, until he-had been given the right of cross-examination, which he had demanded the very next day of his being communicated copy of that statement by the ITO. The statement was communicated on 15th March, 1978 and the assessee demanded the right by letter dt. 16th March, 1978. Then right eventually was provided in the course of preceding for the asst. yr. 1976-77. Shri Jaswinder Singh confirms the facts through an affidavit and his examination made subsequently about his getting a salary of Rs. 350 per month from M/s. Diamond Woollen Mills for the period Oct., 1974 to March, 1975 and Rs. 280 per month from April, 1975 to Dec., 1975 from M/s. Amritsar Woollen Mills. The ITO could not dislodge him from that position. In the subsequent statement recorded on 28th March, 1979. In the affida ..... X X X X Extracts X X X X X X X X Extracts X X X X
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