TaxTMI 
TaxTMI 
2006 (3) TMI 228
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....Nos. (1) UP-02-3737. (2) UP-02-4114. (3) UP-01-1011. (4) UGP-4890. (5) UP-01-424. (6) UHD-5063. (7) UP-01-655. 5. As per police report, the above trucks were coming from Almora and were proceeding to Haldwani. The goods of the above trucks were requisitioned under section 132A(1) of the Income-tax Act, 1961 from the Depot Officer, Lease Depot, Forest Department, Kathgodam who had custody of the goods of the above trucks. From the statement of the drivers of these trucks it was not clear that who were the real owner of these trucks goods, hence these drivers were treated as owners of the goods, because the goods were in their immediate possession. Accordingly, the notices under section 158BC of the Income-tax Act, 1961 were issued on 1-11-1996 to the following drivers:- (1) Shri Ramesh Chandra Pathak. (2) Shri Gopal Sharma. (3) Shri Lalit Mohan Pethshali. (4) Shri Kanti Swaroop Rawat. (5) Shri Sanjay Joshi. (6) Shri Kamala Pati Joshi. (7) Shri Ram Singh. All the above notices returned unserved. Again on 30-6-1997, the above notices were again issued and again they remained unserved. Later on, summons under section 131 of the Income-tax....
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....sp; 1000 Its. at the Oil rate of Rs. 21 per It. 21,000 UP-02-4114.Rosin 260 tins at the rate of Rs. 650 p.tin. 1,69,000 Varnish 2800 Its. at the  ....
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.... goods, as per stock register, were as under:- ----------------------------------------------- Rosin Turpentine Oil Varnish 110.5 qntls. 1,000 litres. 2,800 litres. ----------------------------------------------- The assessee, therefore, submitted that it had sufficient stock of finished goods with it. It was further submitted that the sales were on credit to M/s. Pushkar Industries for the first time. For the purpose of rates of rosin and turpentine, the assessee has furnished copy of sale bills dated 29-8-1996 made in the name of M/s. Rajeev Enterprises and M/s. Harish Kumar and Co. which shows the rates of Rosin at Rs. 450 per tin, rate of Turpentine Oil at Rs. 10.50 per litre and that of Varnish at Rs. 12.50 per litre. The Assessing Officer from the above submissions decided the following issues:- (1) Whether the trucks were coming from Almora to Haldwani or they were going from Haldwani to Almora? The Assessing Officer mentioned that the Police Authorities who intercepted the above trucks on 30-8-1996 have clearly mentioned in their FIR that the truc....
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....essee from undisclosed sources under section 69 of the Income-tax Act, 1961. (3) What was the rate of sale of above goods? The Assessing Officer as regards the rates of these goods found that the assessee has shown the sale rate of Rosin at Rs. 400 per tin and Turpentine Oil at Rs. 10 per litre and that of Varnish at Rs. 15 per litre. As the rates of these goods as shown by the assessee appeared low, the local enquiries were made. On the basis of local enquiries, it was gathered that the average market rates of these goods are as under:- Rosin Rs. 550 per tin. Turpentine Oil Rs. 15 per litre. Varnish Rs. 16 per litre. The Assessing Officer, therefore, concluded that the value of the goods of the two trucks are in a sum of Rs. 4,17,300. The Assessing Officer considering the profit and undisclosed investment in the goods computed the total undisclosed income of Rs. 4,17,300 and directed to charge tax thereon for the block assessment. 7. In the case of M/s. Jageshwar Rosin and Turpentine Factory, the owners of the trucks submitted that they were carrying the goods of the assessee M/s Jageshwar Rosin and Turpentine Factory, Distt. Almora to M/s. Kiran Industries an....
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....s of the rates prevailing for the items intercepted by the Police estimated the value of the undisclosed investment in the stock and profit and computed the undisclosed income at Rs. 10,86,500. Both the assessment orders by different assessees have been challenged before us in first appeals. 9. The learned representatives of both the parties have argued in IT Appeal No. 268 (Delhi) of 1997 in the case of Laxmi Varnish Udyog and have submitted that the facts are similar in both the cases the order in the case of M/s. Laxmi Varnish Udyog may be followed in the case of M/s. Jageshwar Rosin & Turpentine Factory. The learned counsel for the assessees submitted that the goods were in possession of the Depot Officer, Kathgodam upon which the Income-tax department requisitioned the goods under section 132A(1) of the Income-tax Act, 1961. He has further submitted that in this case the goods were never handed over by the D.O. to the Income-tax department in pursuance to the requisition under section 132A(1) and illegally auctioned by Forest Department, therefore, the proceedings initiated under section 132A(1) or resultant framing of the block assessment order under section 158BC should b....
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....all deliver the books of account, other documents or assets to the requisitioning officer either forthwith or when such officer or authority is of the opinion that it is no longer necessary to retain the same in his or its custody. Sub-clause (3) of section 132A(1) provides that where any books of account, other documents or assets have been delivered to the requisitioning officer, the provisions of sub-sections (4A) to (14) (both inclusive) of section 132 and section 132B shall apply. The requirement of the aforesaid provisions would thus be that in case where the Director General or Chief Commissioner or Commissioner in consequence of information in his possession has reasons to believe that any asset represents either wholly or partly income or property which has not been, or would not have been disclosed for the purposes of Indian Income-tax Act by any person from whose possession or control such assets have been taken into custody by any officer or authority under any other law for the time being in force may authorize the authorized officer to require officer or authorities to deliver the assets." In case the delivery of the seized goods are handed over to the Income-tax A....
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.... the goods/assets, then the Assessing Officer shall have to proceed against the concerned assessee for framing the block assessment. The later part of section 132A provided in sub-sections (2) and (3) provides that presumption against the assessee, in case the delivery of the assets or goods have been made to the Income-tax Authority. In the aforesaid case, the learned counsel for the assessee did not provide any material on record to show that the goods were handed over to the court for any purpose. The custody of the goods or assets in this case as recovered from the drivers have not been proved to be handed over to the court because of the fact that the requisition is issued in this case as per letters dated 18-2-1998 of the ACIT, Haldwani on 23-9-1996 and 27-9-1996 immediately after seizure on 30-8-1996. Merely because the goods/assets have not been delivered to the Income-tax Authorities in this case by itself is not enough to conclude that proceedings have to be quashed in the matter. There is no requirement under Chapter XIV-B and under section 158BA(1) or 158BC for delivery of the goods/assets in pursuance to the issue of requisition under section 132A for proceedings to de....
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....es which are suspected to be connected with the some offence of the criminal in nature. No proper case, therefore, would have been registered till it is established that the goods are connected with the crime that to whom these articles are belonged in fact. The Hon'ble High Court considering the submission of the petitioner the Police Officer acted illegally held that provisions of search and seizure have not been properly complied with by the police authorities and when the seized goods were suspected to be connected with the offence and then the same should have been reported to the Criminal Court concerned and in that event it was held that the delivery of the goods should not have been linked to the Income-tax authorities without permission of the Court. 14. However, the present case before us is clearly distinguishable on facts because in this case the goods/assets were connected with the offence under section 4/14 of U.P, Rosin & Other Forest Produce Act which were recovered in the midnight by the police authorities as the same were transported without permission of the Forest Authority. No proper documents of goods were found. Therefore, the cases under the aforesaid pro....
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.... any satisfactory explanation before the Assessing Officer with regard to the transportation of the goods illegally, therefore, the Assessing Officer was justified in treating it to be undisclosed income in the block period. The learned D.R. further submitted that the Assessing Officer has rightly concluded that the goods were transported from Almora for which no valid explanation has been filed and as such availability of the stock as per stock register is unbelievable. The learned D.R. further submitted that the trucks were not carrying any valid permission and no stock register if any maintained at Almora was produced to account for the goods seized from the truck drivers. 18. We have considered the rival submissions and material available on record. The Assessing Officer on the basis of the police report and related material held that the trucks were coming from Almora and were going to Haldwani. The statement contained in the FIR is ultimately found to be correct by the Criminal Court while convicting truck drivers for the offences punishable under section 4/14 of the U.P. Rosin and Other Forest Produce Act. The truck drivers preferred appeals before the Session Judge, Nain....
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....ld not explain those facts before the Assessing Officer. The fact remains that the assessees have not been able to account for the investments in the finished goods being transported in the midnight in the trucks. The Income-tax Authorities are entitled to pass assessment order by taking into consideration the principle of pre-ponderance of probability. The Income-tax Authorities on proper appreciation of the facts and material gave a specific finding against the assessee which have not been rebutted by the assessee by any cogent or reliable material. The goods/assets were ultimately forefeited as per order of the Session Judge, Nainital as the accused were convicted for the offences mentioned above. Therefore, it is specifically proved that the assessee has failed to account for the transportation of the goods/assets in the matter. In this view of the matter and in the absence of proper explanation on record, we do not find it to be a fit case for interference. We accordingly uphold the findings of the Assessing Officer. There is no challenge to the quantity and rates of goods before us as calculated by the Assessing Officer. In the absence of any other material on the issue, we d....