9911796707
TMI Blog1997 (12) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 4,800 out of depreciation on car; (vii) Against the action of the CIT (Appeals) in sustaining the addition of Rs. 85,854 relating to the business income for the period 1-4-1990 to 17-5-1990 as against the declared income of Rs. 24,511 only; and (viii) Against the charging of interest under sections 234A and 234B. I.T.A.No. 752/Chandi./1995 is the appeal by the Revenue wherein the grounds taken are:- (i) Against the relief of Rs. 41,27,826 allowed by the CIT (Appeals) out of the total addition of Rs. 45,44,972; (ii) Deleting the addition of Rs. 4 lacs made on the basis of document No. 19; and (iii) Against the allowance of relief of Rs. 9,16,689 out of the estimated income of Rs. 10,02,543 made on account of income for the period 1-4-1990 to 17-5-1990. 2. The assessee firm derives income from manufacture of brass sheets as well as re-sale of scrap. In the assessment year under consideration, the assessee had declared the total sales of Rs. 5,50,37,667 out of which trading sales of brass scrap amounted to Rs. 5,46,70,307. Thus the sales of manufactured goods included in the total sales were only to the extent of Rs. 3,67,360. In the trading account annexed with the return, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he derived figure on the basis of opening stock as on 1-4-1989 then adding the purchases upto the date of search and deducting the sales therefrom. The working is as under:- Stock position as per books of Account of M/s. Lakshmi Metal Works, Jagadhri, Financial year 1989-90 ---------------------------------------------------------------------------------------- Particulars Copper Scrap. Brass Scrap. Brass Sheet. Copper Ingots. Zinc ----------------------------------------------------------------------------------------- Opening stock 16829 19250 6219 - 7607.000 Add: Purchases 243559 301179 91588 2180.400 5708.370 -------- --------- --------- ----------- ---------- 260388 320429 97807 2180.400 13315.370 Less: Closing 148787 274739 123100 *78973.000 - Sales -------- --------- --------- ----------- ---------- 111601 45690 (-)25293 (-)76793.400 13315.370 *Includes Copper Billets Wt.549 kgs. ------------------------------------------------------------------------------- Particulars Nickel Brass Ingots Brass Dross Brass Billets ------------------------------------------------------------------------------- Opening stock 323 - - - Add: Purchases - 5011 9906 4011 -------- ----- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Counsel for the assessee submitted that in fact there was no difference in the stock as alleged by the departmental authorities. It was submitted that as per the Assessing Officer, the stock found on final verification was 38906 kgs. whereas as per the stock derived from the books of account, it should have been 65112 kgs. Thus as per the Assessing Officer, the stock weighing 26206 kgs. was found less. It was submitted that it was totally wrong to allege that the assessee was having any unaccounted stock of 26206 kgs. when the stock finally found was less. He accordingly submitted that no addition whatsoever was called for on this account. With regard to the difference of 25206 kgs. he submitted that on the date of search, the books of account of the assessee for the year ending 31-3-1990 were not finalised and quantitative tally was not recorded in the books. It was submitted that there was a separate account styled as "under transit sale account". This account was not taken into consideration and was not added to the figures of sales. The assessee, according to the ld. Counsel, sold imported copper scrap weighing 19034 kgs. To M/s. Menu Manufacturing Co., Delhi vide Bill N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the mere fact that in the sales-tax assessment orders, sales to the extent of Rs. 14,36,104 were shown as subsequent sales did not prove that this sale was not taken into account at the time of working out the position of stocks as per the books of account. Accordingly it was submitted that the addition had been rightly made by the Assessing Officer and confirmed by the ld. CIT (Appeals). 7. We have considered the rival submissions and have gone through the orders passed by the lower authorities. There is no dispute that there was a shortage of 26206 kgs. on account of the difference between the stocks as found on physical verification on the date of search and the stock derived on the basis of books of account at 65112 kgs. The explanation of the assessee regarding 19034 kgs. under transit sales account, is only an afterthought which was not given either at the time of search or subsequently when the statement was prepared on the basis of which the derived stock as per books on the date of search was calculated at 65112 kgs. Thus the difference remained unexplained. However, the fact remains that there was bound to be shortage on account of the various stages invo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has disputed the very levy of interest under the charging sections and submitted that the department should have proved that the interest was leviable and since no speaking order was passed, the very levy was not justified. The ld. D.R. submitted that the charging of interest under sections 234A and 234B was mandatory and it was of compensatory in nature. This issue was also adjudicated by us in the cases of Gupta Metal Industries and Shiv Metal & Engg. Works wherein we have held that the charging of interest under sections 234A and 234B was mandatory. Accordingly we uphold the order of the ld. CIT (Appeals) in this regard. However, we direct that the interest should be charged after giving appeal effect to this order. 11. This leaves us only with ground No. (ii) in the Revenue's appeal which is against the action of the ld. CIT (Appeals) in deleting the addition of Rs. 4 lacs made on the basis of document No. 19. The Assessing Officer has discussed this issue in para 6 of the assessment order. According to the Assessing Officer document No. 19 contained certain weighment entries which were not recorded in the books of account. The total of all these entries was Rs. 4 lacs and h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... done in the comparable case of Sohan Lai Suvinder Singh, dealing in the same type of business. It was also submitted by ld. D.R. that there is material difference between the cases of Gupta Metal Industries and the assessee's case, as the former dealt in manufacturing and sale/resale of brass scraps, whereas the latter's business is that of manufacturing of brass-sheets and resale of scrap. It was next pointed out that in the assessee's case, out of total sale to the extent of 5.5 crores, sale of manufactured goods was Rs. 3.67 lakhs and balance sale (i.e., Rs. 5.46 crores) was that of scrap; whereas in the case of Gupta Metal Industries sale of manufactured goods was Rs. 2.52 crores, out of total sale of Rs. 4.26 crores, and balance was on account of sale of raw material. Therefore, according to ld. D.R., the assessee's case could not be equated with the case of Gupta Metal Industries. After hearing the rival submissions, perusing the record and going through the orders of the Tribunal as also the case law cited therein, in my view, facts of those cases are distinguishable. Therefore, order of ld. CIT (Appeals) on this score cannot be held to be valid and the same deserves to be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of entries of document No. 19, on the basis of which addition was made. He further held that no such document was made available nor the assessee was confronted with any material and the addition was accordingly deleted, holding it to be based on surmises and conjectures and without any material or evidence. Before us, ld. counsel reiterated the arguments made before ld. CIT (Appeals) and pleaded for confirmation of the said order. Ld. D.R., on the other hand, submitted that whatever material available with the Assessing Officer was duly confronted to the assessee and it has not denied the factum of recording of entries in document No. 19, seized. Moreover, appraisal report of ADI is a relevant document, therefore, addition made by Assessing Officer deserves to be restored, as per ld. D.R. After considering the rival submissions, perusing the record and in view of entire facts of the case, in my view, it will be just and fair to both the parties, if the issue is restored to the file of the Assessing Officer for deciding the same afresh, after due opportunity to the assessee and confronting the assessee with the circumstantial evidence so collected. This ground of the revenue is tre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eld by the Accountant Member or the ground of assessee be rejected in its entirety as held by the Judicial Member? 3. Whether, on the facts and in the circumstances of the case, the Accountant Member is justified in holding that the net profit should be estimated at 1.5 per cent of the sales for the period from 1-4-1990 to 17-5-1990 or the order of the CIT(A) on the point be reversed and that of the Assessing Officer restored? 4. Whether, on the facts and in the circumstances of the case, the order of the CIT(A) deleting the addition of Rs. 4 lakhs should be confirmed as held by the Accountant Member or the order of the CIT(A) be set aside and restored to the file of the Assessing Officer for fresh adjudication? 2. I must mention at the outset that my task of deciding the first three points of difference has been made easier as a result of the Third Member decision in the case of the sister concern, i.e., Shiv Metal & Engg. Works. However, before I elaborate on this, I have to state that facts and figures are fully set out in the order of learned Accountant Member and these are not disputed by the learned Judicial Member in his separate order and nor have these been challenged b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Shiv Metal & Engg. Works whereas the ld. Judicial Member without rebutting any point made by the ld. Accountant Member or contradicting any finding of fact reversed the order of the CIT (Appeals) and restored the addition made by the Assessing Officer by a single line observation "in my view, facts of those cases are distinguishable". I have dealt with this aspect at length in the Third Member decision of Shiv Metal & Engg. Works case and, in my opinion, the view expressed would squarely apply to the present case as well. The ld. Judicial Member has accepted at face value the arguments of the ld. D.R. without pointing out any infirmity in the order of the CIT (Appeals) or dealing with any of the grounds considered by the ld. Accountant Member to allow the relief that he did. In summing up, the ld. Accountant Member decided the issue pertaining to the first point of difference following decisions of the Tribunal in the cases of Gupta Metal Industries and Shiv Metal & Engg. Works (the latter is subject of Third Member decision). 4. On the second point of difference, i.e., the addition of alleged sale of stock sold outside the books of account, the ld. Accountant Member relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the appraisal report of the ADI. The addition was therefore deleted on the ground that the same had been made on surmises and conjectures without any material and evidence on record. 8. On further appeal, the ld. Accountant Member agreed with the views expressed by the CIT(A) and confirmed the deletion. The ld. Judicial Member, on the other hand, took the view that it would be "just and fair to both the parties" if the issue was restored to the file of the Assessing Officer for deciding the same afresh after due opportunity to the assessee and confronting the assessee "with the circumstantial evidence so collected". 9. The ld. counsel for the assessee vehemently supported the order of the ld. Accountant Member contending that the copy of appraisal report of the ADI had not been given to the assessee and nor was the report placed before the Tribunal. A reference was also made to the letter of the Assessing Officer dated 13-12-1993 seeking information from the assessee on various points including "document No. 19". It was pointed out that the Assessing Officer had categorically mentioned that the weighments pertained to various concerns of the group and it was proposed to add a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so noted that the books of account had been destroyed in a fire while in the custody of the department and this also hampered an explanation on the part of the assessee. Under the aforesaid circumstances, the view of the ld. Judicial Member to restore the matter to the Assessing Officer is not proper since nothing remains to be confronted to the assessee and it is a clear case of asking the Assessing Officer to redecide on the same set of facts and which, in my opinion, is not a judicious exercise of the power of remand. The ld. counsel, in fact, cited a number of decision on the powers of remand by the Tribunal opposing the view of the ld. Judicial Member in sending the matter back to the Assessing Officer, some of these are:- (i) Saurashtra Packaging (P.) Ltd. v. CIT [1993] 204 ITR 443 (Guj.), (ii) Raja Vikramaditya Singh v. CIT [1988] 169 ITR 55 [1987] 32 Taxman 491 (M.P.); (iii) United Commercial Bank v. CIT [1982] 137 ITR 434 9 Taxman 260 (Cal.). Their Lordships of the Hon'ble Madhya Pradesh High Court in the judgment in the case of Raja Vikramaditya Singh observed as under:- "The power of the Appellate Tribunal to remand a matter in an appropriate case to investigate fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
