1993 (12) TMI 101

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....nt year 1986-87 declaring an income of Rs. 45,900. The assessee is a partnership firm carrying on business in purchase and sale of fibre bushes and polishing cakes. On 15-11-1985 there was inspection in the business premises of the assessee by sales-tax authorities. They have detected suppression of stocks of Rs. 3,746. The Commercial Tax Officer, on the basis of material found during inspection determined the value of suppressed stock, which must have been sold by the assessee at Rs. 41,140 and he determined the gross turnover at Rs. 4,23,358 as against the recorded turnover of Rs. 3,82,218. For suppressed turnover he levied and collected C-fees of Rs. 1,259 from the assessee-firm. It is clear that by the date of filing of the income-tax return, inspection by the sales-tax authorities was already conducted. L.F. 159 of Ledger contained the personal account of Shri P. Rama Rao, in whose account there was a credit balance of Rs. 30,880.43. The assessee was questioned about the nature of the credit for which the assessee came forth with the explanation that the correct name of this person was Shri P. Raghava Rao who is employed with the assessee-firm as a clerk. His account started w....

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....cts appended to the income-tax return filed on 18-9-1986. In fact by the date of income-tax return on 18-9-1986 all the above facts are fully known to the assessee. However, the assessee concealed particulars of its income or furnished inaccurate particulars of income. The docket sheets of the assessment proceedings maintained by the Income-tax Officer right from 5-9-1986 i.e., the date on which notice under section 139(2) was given was provided to this Tribunal. After the return was filed notices under sections 143(2) and 142(1) were issued on 18-11-1986 and the case was posted to 2-12-1986. Subsequently the matter was taken up for hearing for the first time only on 11-2-1987. On that date on behalf of the assessee its I.T.P. appeared, books produced by the assessee were examined partly and the enquiry was reposted to 13-2-1987. On 13-2-1987 the following is the docket: "The assessee's A.R. present. Books partly examined. No stock accounts maintained. There is no explanation for the credit given to the account of P. Ramarao (correct name is P. Raghava Rao). The person is stated to be employee of the assessee. The sales tax authorities found stock discrepancies and additions hav....

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.... was dealt with. It is stated as under : ".....it is found that the sales-tax authorities, consequent to inspection made on 15-11-1985, a variations in stocks were noticed to an extent of Rs. 3,750 which is due to the fact that the Commercial Taxes Department Officers have taken the physical stock on hand in the shop premises at the time of inspection and arrived at the stock ought to have been available in the shop on the date of inspection on the basis of the opening stock and the purchases made by us till the date by deducting the proportionate purchase value on the basis of the sales effected till the date of inspection less by estimating the gross profit." It is stated that the sales-tax authorities did not consider the assessee's objection and made the assessment to the best of their judgment basing upon the variation found in the stock account to the extent of Rs. 3,750. Therefore, the estimate of Rs. 40,000 as additional sales turnover not found in the books was only a probability or an estimate and according to the assessee it was highly excessive arbitrary and unreasonable. In the covering letter, it is stated that being a petty dealer, the assessee cannot fight wit....

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....al clinchingly the suppressed income for which the assessee cannot have any plausible explanation. In other words, in my opinion, the quality of the material examined and the scope of such material giving clinching evidence about suppressed income or concealed income should be examined before it is found that there is real detection. Every material found in enquiry cannot reveal or result in detection. No doubt examination of material leads to certain conclusions. Some of the conclusions may be in the nature of probabilities and some conclusions which give rise may be of conclusive nature. If on examination of material, conclusions are reached which are of conclusive nature from which the assessee cannot wriggle out, cannot explain away and cannot but admit the concealed income, then only it can be said to be detection. Amnesty scheme is found out in a series of circulars. One such circular is Circular No. 441 [F. 225/86/85-IT (A. II)) dated 15th November, 1985. The crucial question and answer relevant. for our purpose are as follows : "Question No. 19 : Kindly clarify the expression 'before detection by the Department"? Answer: If the Income-tax Officer has already found mat....