TaxTMI 
TaxTMI 
2008 (4) TMI 357
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....ld to have been validly made by the learned AO by invoking the provisions of s. 153A of the IT Act. 2. That without prejudice, the learned CIT(A) has further erred in failing to appreciate that the learned AO had grossly erred in making the addition of Rs. 2,62,68,654 which addition had been made without any valid material or basis. In fact, the learned CIT(A) has completely overlooked that there was heavy burden on the Revenue to establish there was an understatement of the amount alleged to be an income, which burden had not been discharged and as such, the learned CIT(A) erred in sustaining the addition of Rs. 2,62,68,654. 3. That the learned CIT(A) has failed to appreciate that the learned AO had erred in making an addition arbitrarily of Rs. 2,62,68,654 and that too without rebutting the material evidence furnished by the assessee to establish that neither there was any understatement of an income nor the purported evidence pertained to the assessee's transactions (on the basis whereof the addition was made by the learned AO). 4. That the learned CIT(A) has failed to appreciate that the addition had been purportedly made on the basis of the docum....
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....ifferent manufacturers of the similar material) compared favourably with the sale rates, on which supplies were made by the assessee at Jodhpur and were duly recorded in the books of account and that similarly in respect of similar supplies made in the preceding years also compared favourably with the sales rates of other manufacturers. 9. That the findings of the learned CIT(A) that, it is undisputed fact that the search was carried out on 17th Sept., 2003 at the branch office of the assessee at Jodhpur are based on misconceived facts. The aforesaid alleged fact is a disputed fact. 10. That further findings that during the course of search, it was found that were substantial payments in cash received for under-billing and payments in cash were received at Jodhpur and Mumbai and further cash from parties on account of under-billing was collected at Jodhpur and by Shri Jhala Ram at Mumbai over and above the billing amount, is also erroneous and is in disregard of the voluminous evidence furnished by the assessee to support that such allegations are entirely erroneous. There was no evidence which had been brought on record by the learned AO that the assessee had rec....
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....y case and without prejudice, when such evidence was produced, the same was brushed aside. 15. That the learned CIT(A) has further erred in concluding that the comparability of quoting of rates with other parties is not acceptable, because in the present case quality may be better and popularity of the brand name may be different. In recording the aforesaid findings the learned CIT(A) has ignored that there is no basis for such an allegation. In fact, the assessee had duly established that neither the quality was better nor the popularly warranting the assumption of the CIT(A). In fact, evidence had been brought on record to establish that the popularity and the quality had no such similarity. The learned CIT(A) has thus erred in sustaining the addition of Rs. 2,62,68,654. 16. That the learned CIT(A) has further erred in sustaining the disallowance of Rs. 69,438 for unpaid CST." ITA No. 3481: In ITA No. 3481, only one issue is raised in 15 grounds, i.e., regarding validity or otherwise of search proceedings as well as addition on account of under-billing of invoices. The grounds raised are identical to the ground Nos. 1 to 15 of ITA No. 3480/Del/2006 except ....
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.... s. 37 of the Indian IT Act, 1922, or under sub-s. (1) of s. 131 of the IT Act, 1961, or a notice under sub-s. (4) of s. 22 of the Indian IT Act, 1922, or under sub-s. (1) of s. 142 of the IT Act, 1961, is issued to Shri Sandeep Bansal (name of the person) to produce, or cause to be produced, books of account or other documents which will be useful for, or relevant to, proceedings under the Indian IT Act, 1922, or under the IT Act, 1961, he would not produce, or cause to be produced, such books of account or other documents as required by such summons or notice; Sarvashri/Shri/Shrimati Shri Sandeep Bansal are/is in possession of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Indian IT Act, 1922, or the IT Act, 1961; And whereas I have reason to suspect that such books of account, other documents, money, bullion, jewellery or other valuable articles or things have been kept and are to be found in Depot, Jindal Strips Ltd., C-62, MIS IT Phase, Basni, Jodhpu....
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.... warrant in the case of Shri Sandeep Bansal and it is only in column it was stated that the warrant is to search the premises of M/s Jindal Strips Ltd. Thus, it was submitted that since the warrant was admittedly issued in the case of Shri Sandeep Bansal, it cannot be stated that the search was initiated under s. 132(1) of the IT Act in the case of the assessee company. It was submitted that the provisions of s. 153A could be invoked in the case of the person where the search is initiated under s. 132, or books of account or other documents or any assets are requisitioned under s. 132A after 31st May, 2003. It was submitted that search was initiated against Sandeep Bansal and no search was initiated against the assessee. It was also submitted that registered office of the assessee which is situated at Delhi Road, Hissar, would have been searched and the warrant would have been issued by the concerned authority having jurisdiction over the assessee, whereas the warrant is issued in the case of Shri Sandeep Bansal under s. 132 by the Director General of IT (Inv.), Jaipur. It was submitted that proceedings initiated under s. 153A are without jurisdiction and notices issued for asst. y....
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....pany. AO issued summons to said Shri Sandeep Bansal for appearance on 21st Feb., 2006 on which date said Shri Sandeep Bansal did not appear but requested for a week time on the ground that he was not feeling well. As no medical certificate was enclosed with the said letter, AO inferred that said Shri Sandeep Bansal does not want to appear before him for verification of the affidavit submitted by him to the company which has been rejected by the AO on the ground that the same is an afterthought. AO rejected the affidavit also on the following grounds: 1. The statement given at the time of search was recorded under s. 132(4)/131 of the Act was on oath and was given voluntarily without any pressure and in full senses. 2. From the seized documents and files found from the residence of said Shri Sandeep Bansal, it is evident that all the entries have been made in the handwriting of said Shri Sandeep Bansal and thereafter month-wise cash collection is summarized in computer sheet. 3. Said Shri Sandeep Bansal has not only maintained the above record but he has also maintained record of expenditure incurred by him on account of office rent, house rent, TDS, or an....
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.... cash from re-rolling mills at Jodhpur on the rates decided by the head office which were collected through said Shri Sandeep Bansal at Jodhpur. The amounts of Rs. 2,62,68,654 and Rs. 11,59,78,180 for asst. yrs. 2003-04 and 2004-05, respectively were the amounts received by the assessee on account of under-billing on sales of SS flats and since all the expenditure was debited in the books of account the entire receipt on account of under-billing was the concealed income of the assessee. It is in this manner the AO made the addition. 6. Before CIT(A) the main issues raised by the assessee to contest the assessment framed and addition were as under: (i) Whether the AO was justified in initiating proceedings under s. 153A of the IT Act?; and (ii) Whether the AO was justified in making addition on account of under pricing in the sales shown in the books of account? 7. With regard to the issue that whether the AO was justified in initiating proceedings under s. 153A; it has been observed by CIT(A) that Shri A.P. Garg, senior vice president and company secretary (Authorised Representative of the assessee company) has preferred not to make any submission. Taking in....
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....ied out at the branch office at the assessee company at Jodhpur on 17th Sept., 2003 and also at the residence of assessee company's branch manager at Jodhpur, namely, Shri Sandeep Bansal. During the course of such search. specific, clear and meticulously maintained documents/papers were found wherein proper account of cash collection at Jodhpur was maintained by Shri Bansal at Jodhpur and by Shri Jhala Ram at Bombay which was over and above billing amount of SS flats. A statement under s. 132(4) of said Shri Bansal was recorded in which seized material was confronted to him and said Shri Sandeep Bansal has given a clear and unambiguous statement confirming month-wise cash collection of the material sold by assessee company and recording cash collection on behalf of the assessee company. Modus operandi of cash collection at different places and finally destination of the said unaccounted cash collection were explained in the statement. As per para 9 of the assessment order, the assessee was confronted with the photocopy of the seized document found from the office premises as well as from the residence of branch manager were made available to the assessee. The AO has explained i....
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....rgued that the impugned additions on account of alleged under-billing of sale of stainless steel flats (SS flats) by the Jodhpur branch office have been made solely on the basis of statement of Shri Sandeep Bansal who is disgruntled employee and whose statement was recorded behind the back of the assessee. 11. Elaborating his arguments, it was pleaded by learned Authorised Representative that assessments made by the AO under s. 153A on the basis of documents seized from the residential premises of disgruntled employ without allowing opportunity of cross-examination are void ab initio and are liable to be cancelled. He pleaded that in the process of framing assessment, the Department has deliberately ignored the most relevant evidence in the shape of seized books of account which were found at the business premises of the company and also the statements of various employees, namely, Shri Jhala Ram, Shri Shanti Saxena and Shri Vikram Jindal, etc. recorded by Dy. Director of IT (Inv.) which unequivocally falsify the allegation of under-billing against the assessee. It was contended that search conducted on 13th Sept., 2003 under s. 132A was in the case of Shri Sandeep Bansal who wa....
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....ansactions are found recorded in the seized material are duly recorded in the regular books of account and are audited accounts on the basis of which return of income has been filed in regular manner. Documents at Annex. A (serial No. 2) are copy of sale bills, etc. found during the search operations and have been duly accounted for in the books of account of the branch office. Thus, it was pointed out and submitted that no incriminating material! evidence was found at the business premises of assessee at Jodhpur. 14. Referring to the facts relating to search of residential premises of said Shri Sandeep Bansal, it was submitted by learned Authorised Representative that the search operation commenced at 7.40 AM and statement of Shri Sandeep Bansal was recorded 10 minutes later at 7.50 AM. Thus, it was pleaded that it is quite intriguing to note that within 10 minutes' time, the authorized office had called the witnesses, carried out the search of the residential premises of Shri Sandeep Bansal and prepared the annexures of the seized documents and papers. To support, reference was made to the search papers and the statement of Shri Sandeep Bansal in which reference has been m....
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....ee company. It was also admitted by him that he had been planning to use the fabricated records against the company. Referring to the submissions it was submitted that no adverse inference should be drawn against the assessee company on the basis of statement recorded during the search proceedings. It was further submitted in the said letter that said Shri Sandeep Bansal may be produced for cross-examination in order to enable the assessee to rebut the purported statement which admittedly has made by him to cause financial loss to the assessee company on the basis of fabricated material. The said affidavit was submitted by said Shri Sandeep Bansal during the course of the in-house enquiry conducted by the assessee company and the copy of affidavit was also given to AO along with the abovementioned letter. Though the AO had issued the summon to said Shri Sandeep Bansal for appearance on 21st Feb., 2006, but a letter was filed by the witness to seek an adjournment for a week on the ground that he was unwell. It was not justified that AO has proceeded to frame the assessment without enforcing attendance of the witness for cross-examination demanded by the assessee simply on the basis ....
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....1979) 9 CTR (All) 143 : (1979) 117 ITR 186 (All); (3) Food Corporation of India vs. Provident Fund Commr. (1990) 1 SCC 68; (4) Nathuram Weljibhai Vyas vs. Mrs. Laxmibai Lunkararyi Chandak (1983) 139 ITR 948 (Bom). 19. It was further pleaded that according to principle of natural justice if any evidence is used against a person he should be confronted with it and must be given an opportunity to controvert it. Reference was made to the decision of Hon'ble Supreme Court in the case of Union of India vs. T.R. Verma (1958) SCR 499 (507), wherein it has been observed by their Lordships that rules of natural justice require that a party should have the opportunity of adducing all relevant evidence on which he relies, that the evidence of the opponent should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party, and that no material should be relied on against him when he has not been given an opportunity of explaining them. 20. Reference was also made to the decision of Hon'ble Supreme Court in the case of C. Vasantlal & Co. vs. CIT (1962) 45 ITR 206 (SC) in which it has been held that ....
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....mpany for being denied an increase in his remuneration and proceeded to fabricate the records to harm the company. He pleaded that it is noteworthy that these records have been seized from the residence of disgruntled employee during the search operation which were apparently stage managed at the instance and instigation of the employee himself. The unseemly haste with which the records were passed on to the search party by said Shri Sandeep Bansal and inventorized and recording of his statement being within 10 minutes of the commencement of search depict a very unusual and intriguing picture. The false story of under-billing was spun out by said Shri Bansal before the authorized officer in impatient hurry in the very beginning of the statement before any specific question be put to him. Such fabricated documents cannot be the sole foundation for building a case of over-billing and on-money against the assessee. Reliance was placed on the decision of Tribunal in the case of Asstt. CIT vs. Dalamal & Sons Investment Co. (1993) 46 TTJ (Bom) 143 to contend that note book written by a disgruntled employee found at the business premises of the assessee cannot be the basis for proving cha....
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....hrough telegraphic transfer by an employee of the Madras branch to an employ of Bombay office. 25. Further reliance was placed on the decision of Delhi High Court in the case of CIT vs. S.M. Aggarwal (2007) 211 CTR (Del) 180 : (2007) 293 ITR 43 (Del) to contend that seized documents have no probative value without examination of the writer thereof. In that case the statement given by assessee's daughter was held not relevant or admissible against the assessee since no opportunity was provided to assessee to cross-examine her and it was found that even from the statement no conclusion could be drawn that the entries made in the seized document belong to the assessee and represented his undisclosed income. Following observations were quoted: "It is well-settled that the only person competent to give evidence on the truthfulness of the contents of the document is the writer thereof. So unless and until the contents of the document are proved against a person, the possession of the document or handwriting of that person on such document by itself cannot prove the contents of the document." 26. It was pointed out that in that case the seized documents were recovered f....
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....een found. The books of accounts of the assessee company found and seized have been accepted as correct and true and there is no resort by the AO to the provisions of s. 145 of the Act while making the impugned, assessments. No finding has been recorded by the AO for rejecting these books as unreliable. (ii) The total turnover of the assessee company has been in the neighborhood of Rs. 2,500 crores during the years under reference and the company has sales depots in various cities all over the country, namely, Delhi, Mumbai, Chennai, Calcutta, Hyderabad, Ahmedabad and Jodhpur. While making the impugned assessments for asst. yrs. 2003-04 and 2004-05, the AO has accepted the sales turnover as shown in the books of the company as correct except in the Jodhpur branch for the limited period from 1st Jan., 2003 to 13th Sept., 2003 treating Shri Bansal's books as, gospel truth totally ignoring the fact that the same methodology of marketing its products is followed by the company at various branches including Jodhpur and the marketing strategies as well as policies and procedures for sale are controlled and monitored by its policy planning and control department at the head o....
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....the despicable fact that he is the kingpin of the entire conspiracy against the company to harm its interest by fabricating the record and then pass it on to the Department. (v) The patent falsehood of Shri Bansal's statement before the authorized officer is eloquently evidenced by the fact that despite the magnitude of the alleged under-billing being of the order of Rs. 14.4 crores, as claimed by him, no unaccounted cash, not even a small amount, has been found or seized by the authorized officer from Shri Bansal's residence or the branch office. (vi) It is significant to mention here that the false allegation regarding under-billing has been made by Shri Bansal in his statement at his house recorded at the back of the assessee and no such allegation has been made before the search party at the office premises of the company even though the Panchnama prepared in the case of Shri Bansal for search at the office premises of the company at Jodhpur makes a mention that a statement of Shri Bansal was recorded. (vii) The action of the AO in denying opportunity of cross-examining Shri Bansal, despite repeated requests made by the assessee company, has v....
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....s, it was pleaded by learned Authorised Representative that having regard to the aforementioned facts and circumstances of the case and keeping in view the totality of facts and evidences on record, the assessments made by the AO may be cancelled as void and illegal. On merits it was prayed that impugned additions being invalid and unsustainable in law should be deleted. 31. On the other hand, learned Departmental Representative pleaded that in the present case search and seizure was conducted in the premises under the control of Shri Sandeep Bansal who is the employee (branch manager of the assessee company). There is no dispute with regard to the employment of Shri Sandeep Bansal with the assessee company. The documents/papers seized clearly established the fact of under-billing of sales made from time-to-time leading to the escape of income and thus, escaped income under such conditions could be added in the hands of the assessee since Shri Sandeep Bansal has never carried out business of manufacturer and sale of stainless steel/slabs, flats, coils, bladed steel, black coin, etc. 32. It was pleaded that it is a technical plea of the assessee that provisions of s. 153A coul....
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....bject of giving notice is to inform a person concerned with the matter and if a person receives information/notice by any source and thus, had opportunity of defending him, then the mere fact that notice as per statutory provision, or in a particular mode prescribed under law, has not been given, will not vitiate the action/decision for the reason that the purpose of giving notice was achieved and no prejudices caused to the concern on this score. Referring to this decision it was pleaded by learned Departmental Representative that assessee company was put on sufficient notice by the AO with regard to his intention to tax the assessee company on unaccounted income earned by it in terms of under-billing thus, on technical grounds such addition could not be deleted. 35. It was further pleaded that collection of taxes should not be bogged down on account of technical considerations. Being an enactment aimed at collecting revenue, the legislature did not intend collecting revenue to be bogged down on account of technical plea of jurisdiction. Reference was made to decision of Allahabad High Court in the case of Hindustan Transport Co. vs. IAC (1991) 189 ITR 326 (All). 36. It was ....
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....mental Representative pleaded that assessee company was supplied with the copies of seized documents as mentioned in para 9 on p. 10 of the assessment order for asst. yr. 2003-04 and the assessee company did not choose to reply as mentioned in para 11 of the same assessment order. He pleaded that except for reiterating the issue of cross-examination of said Shri San deep Bansal, no further evidence was led before CIT(A) to controvert the findings arrived at by the AO. 40. It was pleaded that learned Authorised Representative heavily relied on the observance of principle of natural justice for which there cannot be two opinions and lower authorities have given sufficient and reasonable opportunity to the assessee to defend its case therefore, the grounds of reasonable and sufficient opportunity should also be dismissed. 41. Learned Departmental Representative further pleaded that it has been the contention of learned Authorised Representative that other offices of assessee company were not subjected to search and seizure operation. Learned Departmental Representative pleaded that no assessee can dictate to the Department as to which place is to be searched. It depends on vario....
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....ssee. In both of the Panchnamas in Col. A, the name of Shri Sandeep Bansal has been Written which clearly shows that search warrant was in the case of Shri Sandeep Bansal and not in the name of assessee. For sake of convenience the inscription in Panchnama regarding Col. A is reproduced below: Panchnama prepared in respective residential premises of said Shri Sandeep Bansal- Punchnama prepared at the Branch Office of the assessee: 45. Though the above Panchnamas clearly show that warrants were not in the name of the assessee company but were in the name of Shri Sandeep Bansal but learned Departmental Representative wanted time to produce such warrant to support his arguments that warrants are in the name of branch office of the assessee. This case was argued by both the parties on 25th Feb., 2008 and after completing argument learned Departmental Representative sought one month's time to produce copy of search warrants. Similar time was earlier sought by learned Departmental Representative. However, keeping in view the interest of justice further time was given to learned Departmental Representative and the appeals were adjourned to 17th March, 2008 when learned Depart....
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.... the hands of assessee company under s. 153A are not valid, it is observed that the provisions of s. 153C(1) are almost similar to provisions of s. 158BD which is applicable to the searches conducted upto the day of 31st May, 2003. Provisions of ss. 158BD and 153C(1) are reproduced below: "Undisclosed income of any other person.- 158BD. Where the AO is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under s. 132 or whose books of account or other documents or any assets were requisitioned under s. 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the AO having jurisdiction over such other person and that AO shall proceed under s. 158BC against such other person and the provisions of this chapter shall apply accordingly. 153C. (1) Notwithstanding anything contained in s. 139, s. 147, s. 148. s. 149, s. 151 and s. 153, where the AO is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred ....
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...., only if a raid is conducted. When the provisions are attracted, legal presumptions are raised against the assessee. The burden shifts on the assessee. Audited accounts for a period of ten years may have to be reopened." (emphasis ours) 49. From the above observations of their Lordships of Hon'ble Supreme Court, it is clear that before provisions of s. 158BD/153A are sought to be applied then the conditions laid down in these sections are required to be satisfied. It has further been observed that provisions contained in Chapter XIV-B are drastic in nature and these have draconian consequences and such proceedings can be initiated only if search is conducted because when these provisions are attracted legal presumptions are raised against the assessee and burden also shifts on the assessee. In view of these observations, it will be incorrect to say that non-fulfilment of conditions precedent for invoking provisions of s. 153C is merely a technical defect which can be cured. Reference here also can be made to the decision of Hon'ble Calcutta High Court in the case of Sunrolling Mills (P) Ltd. vs. ITO (1986) 54 CTR (Cal) 268 : (1986) 160 ITR 412 (Cal), wherein the AO h....
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....t is a jurisdictional notice and is not curable under s. 292B of the Act, if it was not served in accordance with the provisions of the Act." 51. In view of above discussion, the argument of learned Departmental Representative that in view of s. 292B, the assessments of the assessee could not be held invalid, does not hold good and has to be rejected. 52. Now, coming to the case law relied upon by learned Departmental Representative in the case of T.A. Abdul Khader vs. CWT, the validity of assessment was challenged on the ground that notice issued under s. 18(2) was invalid on the ground that the section under which return was filed namely that s. 14(1), 14(2) or s. 17 was not made clear as none of three sections was struck off in the notice. It was held that same did not affect the validity of notice under s. 18(2) as assessee had understood the notice and also complied with the same by giving the explanation for the delay in filing the return. It was also admitted by the assessee that he did not file return under s. 14(1) but he filed belated return and thus, it was held that s. 42C attracted and notice was valid. In that case there was some mistake in the issue of notice a....
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....#39;s case to E Ward, Lucknow Circle, Lucknow, and the said order will take effect from 20th Jan., 1988. It was contended that in view of the said transfer order, the AO who has framed the assessment seized to have jurisdiction to deal with the assessment w.e.f. 20th Jan., 1988 and thus, the order of assessment passed on 30th March, 1988 is without jurisdiction. Their Lordships had examined provisions of s. 124 and found that the assessee's case was covered by cl. (a) of sub-s. 5 of s. 124. It was observed that the Act does not prescribe the respective jurisdiction or functions of various IT authorities and the various IT authorities are of co-ordinate jurisdiction and it was observed that such a defect arising from allocation of functions is a mere irregularity which does not effect the resultant action. In our considered opinion, no support can be drawn by Revenue from the said decision to uphold the validity of assessment framed under s. 153A in the present case as non-fulfilment of conditions laid down in ss. 153A and 153C is neither a procedural defect nor administrative defect but it relates to jurisdictional defect. 55. In view of above discussion it is held that the ....
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....al that he was promised for a higher emolument after sometimes after he was transferred to Jodhpur in the month of January, 2003 but despite the promise made, no substantial increase was given despite his repeated request to the management for higher salary. It has further been mentioned that the statement given at the time of search was totally untrue and incorrect and was made in the scheme of things planned by him to cause financial loss and damage to the aforesaid company. He has also stated that he had in the scheme of things prepared certain papers including the floppies on which he noted certain assumed figures on the basis of which he could allege that the company had received money by under invoices of the sale bills and also he intended to handover the said fabricated record to any Government authority with an intention to cause damage to the company if his request for increment in salary and for other benefits would not have been favorably accepted. 59. In view of above-mentioned repeated requests, the AO was under legal obligation to provide the assessee with an effective opportunity to cross-examine said Shri Sandeep Bansal for keeping observance to the principles o....
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....AO further has placed reliance on the documents which have been seized from the residence of said Shri Sandeep Bansal. Here also, no further verification has done by the AO to find out the authenticity of those documents as according to Department full statement of affairs was recorded therein. If full particulars were available then it was not difficult for the AO to establish that in fact assessee had received extra consideration by over-billing. No such exercise has been done by the AO but reliance has been placed only on the statement of said Shri Sandeep Bansal. In other words, addition cannot be held justified on the basis of documents found from the residential premises of said Shri Sandeep Bansal unless positive material is brought on record by the Revenue that the assessee in fact had received any extra money on account of over-billing. There is complete absence of such material. 60. The reliance by learned Departmental Representative on the decision in the case of Atul Traders vs. ITO is also misplaced as in the said case it was observed by their Lordships that the assessee was given opportunity of hearing. It was further observed that object of giving notice was to in....
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....ish such collection of money. It has already been pointed out that it is not the case of the Department that such evidence/material could not be collected by the Revenue to establish the fact that there was any collection made by the assessee by way of under-billing. 63. For contending that affidavit given by Shri Sandeep Bansal is self-serving evidence and is also afterthought and the same could not be relied according to the decision of Hon'ble Supreme Court in the case of CIT vs. Durga Prasad More wherein it is held that it was neither a rule of prudence nor a rule of law that the statement made in an affidavit which remains uncontroverted must invariably be accepted as true and reliable, the facts in the present case are totally different. Neither the statement of the said Shri. Sandeep Bansal has undergone a test nor affidavit submitted by him has undergone a test. Therefore, nothing conclusive can be inferred either from statement or from affidavit. The question in the present case is that whether there was any evidence which has been put to test to establish that there was any collection by the assessee on account of under-billing in respect of sales made by it? There....
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.... the said case the appeal of the assessee was allowed solely on the ground that the statement of Bankelal which was not tested by cross-examination was used in order to reach the conclusion that the transaction was an inter-State sale. 68. In the case of Kishinchand Chellaram vs. CIT, an employee of the said company had made telegraphic transfer of a sum of Rs. 1,07,350 to N who was also an employee of that assessee in Bombay office. On enquiries made by AO from Madras Bank, manager of bank informed the AO that telegraphic transfer of Rs. 1,07,350 sent by assessee from Madras was received by bank at Bombay and the amount was paid to N. The AO treated the said amount as income of the assessee from undisclosed sources. It was held by Hon'ble Supreme Court that such addition was not justified. The burden of proof was on the Revenue to prove that amount belonged to the assessee. Letters of the bank manager, in absence of same being supplied to the assessee, could not be used against the assessee as manager was also not examined by the Department and there was no positive evidence for the conclusion that such amount belonged to the assessee. 69. In the case of CIT vs. SMC Shar....
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....6. The AO has not made any comments on such submissions of the assessee. However, CIT(A) has rejected such extension of the assessee with the following observations: "As far as comparability of accounts for rates with other parties is concerned, the same is not acceptable because in the present case quality may be better and popularity of brand may be. Moreover, the rate chart is not supported with prevailing price evidence of appellant and other suppliers. In any case Department has found emphatic evidence of cash collection over and above bill amount." 72. The AO did not comment on such submission of the assessee. If there is an allegation of having receipt extra consideration, and it is denied by the assessee by producing sufficient evidence to contend that such allegation of having received extra consideration is not supported by surrounding facts, the said evidence cannot be rejected on the face of it without making verification in this regard. The evidence submitted by the assessee was documentary evidence containing all necessary particulars which included name of the seller, name of the buyer, type of commodity, its quantity and rate. The parties between whom th....