Under-invoicing of export sales cannot be taxed on a commission report alone without independent evidence.

An addition for alleged under-invoicing of export sales could not be sustained merely on the basis of the Justice M.B. Shah Commission report. The Tribunal found that the Assessing Officer had not rejected the books of account, had not shown that true income could not be deduced from them, and had produced no independent evidence of under-invoicing or unaccounted sale proceeds. The Commission report was treated as tentative rather than conclusive, especially where contemporaneous commercial and customs documents supported the declared exports. The deletion of the addition was upheld, and no substantial question of law arose.

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Issues: Whether the addition made on account of alleged under-invoicing of export sales could be sustained solely on the basis of the Justice M.B. Shah Commission report in the absence of independent evidence collected by the Assessing Officer.

Analysis: The assessment was reopened on the basis of information from the Justice M.B. Shah Commission regarding alleged under-invoicing of iron ore exports. The Tribunal found that the Assessing Officer had not rejected the books of account, had not demonstrated inability to deduce true income from the books, and had not brought any independent material to establish under-invoicing or receipt of unaccounted sale proceeds. The Tribunal also held that the Commission report was only tentative and, by itself, could not be treated as conclusive evidence to fasten tax liability, particularly when the assessee had produced contemporaneous commercial and customs documents and the declared exports had been assessed by customs authorities.

Conclusion: The addition for alleged under-invoicing was not sustainable on the material relied upon by the Revenue, and the deletion of the addition was upheld.

Final Conclusion: No substantial question of law arose from the Tribunal's order, and the Revenue's challenge did not succeed.

Ratio Decidendi: A tax addition based on alleged under-invoicing cannot be sustained merely on the basis of a commission report unless supported by independent evidence and proper examination of the assessee's accounts and surrounding commercial material.

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