9911796707
TMI Blog1995 (6) TMI 48X X X X Extracts X X X X X X X X Extracts X X X X ..... ts as accounted for in the books of account. According to the assessee, the sum of Rs. 14,50,000 mentioned in the seized papers did not represent the concealed income of the assessee. 3. The assessee also agitated that it had already declared a considerable amount in the subsequent year and therefore according to it, the additions should not have been confirmed. In short, the CIT(A) has confirmed the additions made on account of sale of liquor and beer and seized papers relating to M/s Vishesh Developers, a sister concern. 4. We have heard the learned representative for the assessee Sri V.H Patil and learned. Departmental Representatives S/Sri Tilakchand and Sahay. Their arguments are taken into consideration. 5. The assessee is carrying on the business of bar and restaurant. The AO examined the trading accounts in respect of purchase and sale of beer, whisky and food items. He did not follow a reasonable and realistic manner in estimating the income. He made an imaginary highpitched estimate. The estimation made was not based on any material or evidence found at the time of search. The AO has relied on the seized material for a few days relating to asst. yr. 1991-92. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rse of search. A letter dt. 26th June, 1990 was written in respect of this declaration. 7. It is true that the retraction form the contents of the statement cannot be accepted if there is any tangible or corroborative evidence or material to establish that the quantum of disclosure made was backed by unexplained assets or undisclosed income. The Bombay Bench of Tribunal in the case of M/s Pushpa Vihar, Bombay (ITA No. 1822/Bom/90 dt. 12th July, 1993) held that mere admission cannot be a bed rock or foundation of an assessment. It is always open to the assessee who made the admission to show that what he admitted was not correct. Therefore the admission made by a person is relevant in deciding the matter but is not always conclusive. The judgment of the Supreme Court in the case of Shri Krishna vs. Kurukshetra University reported at AIR 1986 SC 593, was relied upon. In that case, the Supreme Court held that in the case of retracted confession by an accused not supported by independent corroboration, benefit of doubt can be extended to the accused. 8. In the instant appeal, the assessee retracted partially and the AO did not accept the same. He made the assessment on the basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to consideration. Provisions of s. 145(1) can be applied even to a particular item of sale, but at the same time, it is necessary to reject the book results, to rely on a certain material giving an idea regarding suppressed income and then to estimate the sales and profits at a higher figure. If the accounts maintained by the assessee in respect of foodstuff were proper, it cannot be said that the accounts maintained by the assessee in respect of sale of liquor and beer was not reasonable. The assessee maintained a combined trading account. The GP rate relating to food items was 44.45% as considered by the CIT(A) on pg. 15 of his order. The AO estimated the sale of beer at Rs. 7,25,430 and whisky at Rs. 36,43,018 as against the sale of Rs. 86,036 and Rs. 8,55,745 respectively shown by the assessee. The estimate has been made with reference to the alleged unaccounted sales for 6 days in respect of whisky and 36 days in respect of beer as is evident from the seized papers relating to asst. yr. 1990-91. It cannot be said that the sales made relating to asst. yr. 1991-92 would have been much more in the said period or for the same period of length in the earlier year. There was no reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his figure of Rs. 34,22,980. He held that the GP rate applied by the AO at 52.25 is quite reasonable and therefore did not interfere. He worked out the GP on whisky at Rs. 17,79,948 in respect of estimation of sales in beer account. He held that the ratio in the beer account was based on the figure of sales for a period of 36 days in the subsequent year. Again the yardstick on estimated sales in respect of beer applied by the AO and confirmed by the CIT(A) is not correct for the same reasons as in respect of whisky. According to him, the assessee recorded 15% of the total sale of beer in the books of account. He estimated the sales at Rs. 5,73,706 as against the estimate made by the AO at Rs. 7,25,430. He directed to restrict the estimate of sale of beer at Rs. 5,73,706 and GP applied at 52% was held to be quite reasonable. He restricted the GP on all the 3 items of food stuff, beer and whisky at Rs. 35,58,432. After allowing indirect expenses of Rs. 16,99,249 as debited in the P L account net profit was worked at (Rs. 35,58,432 minus 16,99, 249) = Rs. 18,59,183 by giving relief of Rs. 13,09,758. 13. In para 16 of his order, the CIT(A) held that although there was no direct evid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y days. According to him, a few days' sale in a month cannot be treated as the basis for estimation for the entire month. We are of the opinion that if an assessee has to be made liable to pay more taxes on the basis of mere estimation of sale of whisky and beer and further estimation of profit at higher rate without any supporting evidence, relying on a seized paper for the subsequent year would not be a reasonable yardstick. If there is supporting evidence for making estimation of sales and profits, undoubtedly such estimation cannot be rejected. In the present case, we do not find any such material on record. Secondly, estimation should not be made at higher figure because there was a search and seizure operation. For all these reasons, we are unable to accept the contentions of the learned Departmental Representatives that the books of account were not relied upon and that the admission made by the assessee is a good evidence because the admission is clear. If the admission made by the assessee was so spontaneous, then the assessee should not have retracted immediately on the second day of the search and seizure. The decision of the Kerala High Court in Vazhakal Estate vs. Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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