1983-VIL-66-ITAT-PNE
Equivalent Citation: TTJ 018, 167,
Income Tax Appellate Tribunal PUNE
Date: 04.03.1983
INCOME-TAX OFFICER.
Vs
BALA PRASAD R. LOKMANYAWAR.
BENCH
Member(s) : B. L. SHELAR.
JUDGMENT
B. L. Shelar, Judicial Member - The only point in this departmental appeal is that AAC erred in deleting amounts of Rs. 13,320 in respect of suppressed sales and Rs. 10,000 as unexplained capital outside the books treating the same as not belonging to the assessee.
2. The assessee is assessed in the status of Individual deriving income from running oil mill namely 'Saibaba Oil Mill'. The assessee showed sales of Rs. 1,46,653 on account of oil sold and Rs. 48, 854 on account of oil cake. On going through the accounts it was noticed that the sales recorded by the assessee in respect of Seetharam Chaturbhuj do not tally with the sales recorded by the assessee. It was the version of the assessee that the sale of oil and oil cakes was effected through Seetharam Chaturbhuj being commission agent.
3. It may be stated at this stage that the Sales Tax Authorities had raided premises of Seetharam Chaturbhuj and in a particular diary of notebook they found that sales in the name of this assessee were mentioned and the sales amounted to Rs. 2,28,121. The Sales Tax Authorities had asked the assessee about the sale transaction which was flatly refused by this assessee and he stated that he had nothing to do with the sales allegedly shown in his name in the books of Seetharam Chaturbhuj. The ITO considered this material and he was convinced that the sale of oil of Rs. 2,28,121 must be that of this assessee only but the assessee contended before the ITO that the alleged sales of Rs. 2,28,121 had already been taxed in the hands of the commission agent namely Seetharam Chaturbhuj and there was no point or question of levy of tax on the same transaction twice. However, these contenions of the assessee did not find favour with the ITO who treated the sales as effected by this assessee and the turnover of Rs. 2,28,121 was also included in the assessee's income and the ITO adopted G.P. thereon. Further the ITO was of the view that for such a huge turnover the assessee must have put his capital which he estimated at Rs. 10,000. Thus he completed the assessment of the assessee.
4. Against the order of the ITO the assessee went in appeal before the AAC before whom two affidavits sworn in by Shri Vijayakumar of Seetharam Chaturbhuj and Shri Bhagwan Pamwar who was previously a Munim of the assessee were filed. The affiants in their affidavits stated that the transaction allegedly shown in the name of this assessee were not of this assessee and that they were the transaction effected by Seetharam Chaturbhuj. Before the AAC the order of the STO was also produced and after going through the material before him the AAC held that there is no justification or in fact there is no conclusive evidence in support of the contention that the sales effected of Rs. 2,28,121 where the sale of this assessee. Therefore, he deleted the addition made by the ITO i.e., the G.P. of Rs. 13,320 on the sales of Rs. 2,28,121.
5. Regarding the point of capital employed the AAC observed that since the sales were not taken to be those of the assessee, the question of capital employed does not arise and accordingly he deleted Rs. 10,000 on that count also.
6. The department is aggrieved with the order of the AAC hence this appeal before the Tribunal.
7. Shri Trimal, the departmental representative, at the very outset stated that the order of the AAC has not given sound reasoning for deletion of the amounts added by the ITO. In fact the departmental representative stated that the AAC has simply gone on the footing of the affidavits filed by the two persons mentioned earlier and that it was wrong on the part of the AAC to rely fully on the contents of the affidavits.
Shri Trimal gave me the copy of the order of the STO dated 31st March 1977 and also earlier order. The STO observed in his order "when asked whether they have maintained any books, the parties have stated that they have not maintained any books of account because they have done the business of brokerage. It is not understood when such a huge turnover is effected from the parties and supplied (sold) to Seetharam Chaturbhuj. They do not know even the name of the person to whom i.e. on behalf of whom they have acted. The contention put forth by the C.A. and the person cross examined, does not seem to be reliable."
8. Shri Trimal also stated that in the order of the STO dated 1st December 1973 this assessee has put his signature on the amounts withdrawn and therefore, there is every justification to hold that the sales were suppressed by this assessee and that the ITO was justified in treating the sales of this assessee and estimating the G.P. thereon. He also submitted that the capital employed by the assessee which was estimated by the ITO at Rs. 10,000 is very reasonable and, therefore, the AAC's order be set aside and that of the ITO be restored.
9. Shri Avadhani, the ld. Representative of the assessee, at the very outset stated that since it has been established by a fact that the transaction has been taken to be the transaction of Seetharam Chaturbhuj, there is no justification for holding that the transaction is of this assessee. Shri Avadhani placed before me a compilation running into 12 pages wherein he has given details and he drew my attention to the affidavits filed by Shri Bhagwan (munim) and Vijayakumar, the proprietor of Seetharam Chaturbhuj. Shri Avadhani stated that right from the initial stage the assessee is denying that the transaction does not at all belong to this assessee and for that purpose he drew my attention to page 12 of the compilation wherein he has clearly stated that the cash drawings have been bearing the signature under the name of Bhagwan or Vijaykumar. In the said letter the assessee has stated that the transaction shown to him from the above two diaries do not anywhere find place in his books of accounts maintained in the regular and ordinary course of business transactions which have been duly authorised by him. Further the assessee states that he is filing his quarterly returns with the Sales Tax Authorities and the assessee is denying having any relation with the transactions in question. He also draw my attention to the letter written by the assessee to the STO dated 9th November, 1973 where again he has stated "neither of the above signatures (apart from the reality accuracy of the said signatures) have been authorised to enter into the said transactions and hence the same are not binding on me or my unit."
10. Shri Avadhane draw my attention to page 10 of the compilation dated 25th November, 1973 wherein it is clearly mentioned that this assessee has got nothing to do with any books of Sitaram Chaturbhuj and, therefore, the assessee cannot be held responsible for the entries made in the books of Sitaram Chaturbhuj. He further mentioned that it is wrong to say that this assessee suppressed sale to the tune of Rs. 2 Lakhs and odd through Sitaram Chaturbhuj who was dealing in shady activities.
The point that Shri Avadhane made was that on each and every occasion this assessee has flatly denied having anything to do with the sale amounting to Rs.2 lakhs and odd. He also drew my attention to page 8 of the compilation wherein the submissions are made by the assessee to the Asstt. Commissioner of Sales Tax wherein he has again stated that the transaction in question do not pertain to the appellant (this assessee).
In para 3 of his letter states that "furthermore, it is also submitted that without prejudice to the above under section 16(2), the primary liability of tax was that of the agent Sitaram Chaturbhuj. Accordingly, the said turnover has been included in his turnover and the same has been taxed at this point and the said tax too has been duly collected." Shri Avadhane made another point that if really the assessee had effected the sales to the tune of Rs.2 lakhs and odd there should have been some unit consumption by the assessee and for that purpose he draw my attention to page 4/2 of the compilation wherein he has given details of the amount that the assessee was required to pay on account of electricity units and it is pertinent to note that there is no variation in the power consumption by the assessee especially having in view power consumption by the assessee for S.Y. 2027 (it was 4112 whereas for this year it in 3523). Accordingly Shri Avadhane submitted that having regard to another fact that the affians were cross examined proved the assessee's version beyond the shadow of doubt that the sales do not belong to the assessee. His submission was that the order of the AAC be upheld.
11. I have given due consideration to the rival submission and gone through the orders of the authorities below and the compilations filed by both sides.
At the very outset, I must state that the order passed by the AAC, is a very cryptic one and does not give reasoning as to why he has given relief to the assessee. The AAC has merely relied on the affidavits filed by S/Shri Bhagwan and Vijayakumar.
12. I have gone through the contents of affidavits and find that they support the assessee's version. It cannot be said that it was an after thought of the assessee to ask Shri Bhagwan or Shri Vijaykumar to file affidavits to support the assessee's case on the contrary right from the stage the STO started conducting the proceeding and making enquires, the stand of the assessee was that the sales in the name of assessee in the books of the firm Sitaram Chaturbhuj do not belong to him. Therefore, it is wrong to say that the filing of affidavits by two persons mentioned earlier was an after thought. Even in their examination nowhere have they accepted that the sales of oil and oil seeds of Rs. 2 lakhs and odd were the sales of this assessee and, therefore, it is unwise to draw such an inference.
13. In case the assessee really had effected the sales of Rs. 2 lakhs and odd naturally the assessee would have been required to use the machines which only work on electricity and as such there would have been more consumption of units for such a huge trunover. The assessee's page 4/2 giving details is very much helpful to decide the case in favour of the assessee on that count also. I hold there was no manufacture of oil or crushing of seeds by the assessee and it is worthy to note that the concerned authorities have taxed Sitaram Chaturbhuj on the turnover of Rs. 2 lakhs and odd. Therefore, simply because in the books of a stranger assessee's name comes and the entry narrates that there were certain sales effected by the assessee, it will be unwise to tax the assessee on such a flimsy material i.e., the books of a third party. That is most uncalled for. Therefore, on that point also the assessee should succeed.
4. Shri Trimal had read certain portion from ITO's order dated 1st February 1973 wherein there is a narration stating that the assessee had withdrawn Rs.10, 000 on two occasions. It is worthy to note that the STO has mentioned in his order "his (this assessee's) contentions that whatever his transactions that were shown in the return were correct and the suppressed sales which were noted down in the assessee's diary are not pertaining to him......... contention is not accepted." Therefore, it cannot be said that the assessee was trying to save his skin. On the contrary his version is absolutely right from the beginning, and therefore, it cannot be held by any stretch of imagination that the transaction exceeding Rs. 2 lakhs and odd was that of this assessee. therefore, I uphold the order of the AAC but for reasons other than those of his and hold that the additions made by the ITO had to be deleted. Accordingly the departmental appeal is dismissed.
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