TaxTMI 
TaxTMI 
2011 (8) TMI 658
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....anufactured liquor on the basis that it was sold at the rate of Rs. 3.60 per sachet of 100ml?. 2. Whether the Tribunal was justified in law in coming to the conclusion that the appellant recovered from the licensees by way of sale price the whole of the excise duty of Re. 0.2 per sachet that would have been payable had the liquor been purchased by them from Government sources ? 3. Whether on the facts and in the circumstances of the case the finding of the Tribunal that the entire excise duty at the rate of Re. 0.2 per sachet though not paid by the appellant was reimbursed to him as a part of sale price by the licensees in the unlicensed territories is perverse and contrary to the normal course of human conduct ?" 3. I.T.A. No. 3136/2005 has been admitted on 18-9-2006 for consideration of the following substantial questions of law: "1. Whether the Tribunal committed an error in holding that the sale price of arrack should be taken at was Re. 0.9 as against Re. 0.12 disclosed by the assessee in his regular books of account where the assessee had vending rights to sell arrack ? 2. Whether the Tribunal committed....
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....eption of Chapter XI-VB of the Act ?" Since both the appeals arise out of the common order passed by the Tribunal, these two appeals are disposed of by this common order. Though the appeals have been admitted for consideration of the above substantial questions of law, the learned counsel appearing for the revenue and the learned counsel appearing for the assessee submitted that they would only argue in respect of the substantial questions of law pertaining to the price fixed for sachet of arrack by the appellate authority and also the inclusion of excise duty for the purpose of determining the price and the validity of the set off given to the assessee. 4. The material facts necessary for answering the abovesaid substantial questions of law in both the appeals are as follows:- 4.1 The assessee, being a recognized arrack vending contractor is engaged in the liquour business in Karnataka. He is a licence holder from the Excise department for retail vending of arrack. His territory comprises of 10 Taluks, which will be hereinafter referred to as 'the own territory'. The assessee also sells arrack outside his own territory at Shimoga, Sagar, Udupi and Bangalore Taluks, hereinafter ....
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....e said order passed by the appellate authority, preferred appeal before the Tribunal in IT(SS)A No. 152/BANG/04. The Tribunal by order dated 26-5-2005, held that the Assessing Officer was not justified in adopting a flat rate of Re. 0.12 for the entire quantity of unaccounted arrack and directed the Assessing Officer to compute the undisclosed income considering the sale value of the unaccounted arrack at Rs. 9 per sachet in respect of sale in assessees own territory and regarding sale of arrack outside assessee's own territory, the Assessing Officer was directed to adopt the sale price at Rs. 1.60 plus the Excise duty per sachet, after verifying the same. So far as the set off of the miscellaneous receipts against the undisclosed income for the assessment year 2001-02 is concerned, the Tribunal held that part of the miscellaneous receipts represent goodwill and income other than the arrack business and accordingly, directed the Assessing Officer that an amount of Rs. 6,00,00,000 be adjusted against the undisclosed income from arrack business against Rs. 8,76,75,000 claimed by the assessee under the miscellaneous receipts. The Tribunal upheld the finding of the Assessing Officer re....
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....ined in Chapter XIV-B of the Act and the other provisions of the Act are not applicable. He submitted that the Tribunal ought to have granted the set off as claimed by the assessee and he is not liable to include the excise duty in the sale price. The learned counsel, in support of his contention, has relied upon the decision of the Hon'ble Supreme Court in CIT v. Ravi Kant Jain [2001] 250 ITR 141/117 Taxman 28 (Delhi), wherein it is held as under: "The special procedure of Chapter XIV-B is intended to provide a mode of assessment of undisclosed income, which has been detected as a result of search. As the statutory provisions go to show, it is not intended to be a substitute for regular assessment. Its scope and ambit is limited in that sense to materials unearthed during search. It is in addition to the regular assessment already done or to be done. The assessment for the block period can only be done on the basis of evidence found as a result of search or requisition of books of account or documents and such other materials or information as are available with the Assessing Officer. Evidence found as a result of search is clearly relatable to sections 132 and 132A." 8. In repl....
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....der passed by the appellate authority and the Assessing Officer. 11.1 It is well-settled that the Tribunal is the final authority on the question of fact and law. The Tribunal, having regard to the admitted fact that the search material revealed sale of 1,97,74,000 sachets within assessee's own territory and outside assessee's own territory as referred to above and the fact that the maximum price fixed by M/s. MSIL for sale of sachets was less than Rs. 9 and in view of the notification issued by the Excise Department fixing sale price of arrack at Rs. 85 per litre i.e., 8.50 per sachet of 100 ml. held that adoption of Rs. 9 per sachet by the assessee in respect of unaccounted sale of arrack in his own territory was in order. The said finding of the Tribunal fixing the sale price of unaccounted arrack in assessee's own territory at Rs. 9 per sachet, which is based upon: the notification issued by the Government fixing the sale price of arrack; the rate at which M/s. MSIL, fixed price of the sachets of arrack and also the price at which arrack was sold in the neighbouring areas, cannot be said to be perverse or arbitrary. 11.2 So far as the sale price of unaccounted arrack outside ....
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....aim of the assessee. The Assessing Officer held that the assessee has failed to provide any link, which would show that the income shown under the miscellaneous receipts in the books of account is related to the unaccounted sale of arrack and this is a case, wherein the matter has to be decided on probability because direct evidence of clinching nature is not available and the assessee did not produce any material to show the break-up of the miscellaneous income, in respect of which set off was claimed for the assessment year 2001-02 and for the block period. The appellate authority has also assigned cogent reason that though the assessee has disclosed miscellaneous receipts in the regular books of account and has declared miscellaneous receipts year after year in the returns of income filed for the assessment years 1989-90 to 2001-02, such declaration itself in no way establishes the fact that the source of such miscellaneous receipts irrespective of the same being accounted under the head 'Other sources' was from the parallel excise business of the appellant more so when no detail whatsoever was available on record or has been furnished by the appellant in that regard and the app....
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....ide as it is perverse and arbitrary and not based on the material on record and to that extent, the substantial question of law has to be answered in favour of the revenue. Regarding inclusion of Excise duty in the sale price of sachet as also the levy of surcharge: 13. Since the assessee himself admitted that he has not included the Excise duty in the sale price, which is Rs. 2 per sachet, the inclusion of the said Excise Duty is unassailable and levy of surcharge and interest is also justified in view of the decision of the Hon'ble Supreme Court in Rajiv Bhatara's case (supra), wherein it is held that in search and seizure proceedings in respect of block assessment, levy of surcharge even without the proviso to section 113 inserted vide Finance Act, 2002, with effect from 1-6-2002 is justified and the proviso to section 113 is clarificatory in nature. The Tribunal has failed to note that the assessee had not disclosed the income received by sale of unaccounted arrack and wherefore, he is liable to pay interest under section 158BFA of the Act and the finding of the Assessing Officer to that effect cannot be interfered with. Therefore, the assessee is liable to pay interest for t....