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1994 (11) TMI 436
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....iscrepancies. For assessment year 1988-89, the said discrepancy was as under: S. No. Party's Name Sales on basic Value as per incentive bonus Paper seized Basic value of sales recorded in assessee's book Difference 1. M/s Sethi General Store 25,32,516 18,77,955 6,54,561 2. M/s Duggal Crockeries 11,40,961 3,34,605 8,06,356 3. M/s Capital Crockery 12,79,416 8,56,158 4,23,258 18,84,175 For assessment year 1989-90, discrepancy was noticed as under: S.No. Name of the dealer Basic value As per sale Register for 88-89 (Annex.B-4) Basic value as per Annexure A-24 Statement of incentive bonus Sale of goods suppressed Basic value of goods sold 1. Amar Singh & Sons, Delhi 6,90,327 7,49,569 59,242 2. Capital Crockery House 9,94,327 10,20,732 26,108 3. Delhi Crockery Agency, Delhi 6,05,475 6,61,464 55,989 4. Kashmir Traders, Delhi 4,09,363 4,10,501 1,138 5. Sethi General Stores, Delhi 3,06,514 10,46,267 7,39,753 6. Duggal Crockery Ag....
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....al Crockery, Delhi and M/s. Capital Crockery Stores confirming the version of the assessee. a certificate from M/s Sethi General Stores, however, could not be filed on the ground that the party was not available at the relevant time. The Assessing Officer did not accept the explanation of the assessee as according to him, there were no supporting records available with the assessee in this regard. The Assessing Officer considered the explanation of the assessee as in innovative one 'after thought'. Assessing Officer was of the view that assessee has made a frantic hit to somehow tally the sales figures available to incentive bonus by locating suitable bills that can match them. He accordingly concluded that the amounts of sales available on the incentive bonus statement are correct figures of the sales and the difference between the sales available on the seized paper and those recorded in the assessee's books was taken as assessee's sales outside the books. He not only added the difference on the basis of basic value but also added excise duty @ 20% plus sales tax @ 10%. Addition of Rs. 24,87,111 was accordingly made for assessment year 1988-89. 3. Similarly, for assessment yea....
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....cording to the learned counsel, has not examined the parties. Shri Monga contended that assessee was free to arrange his affairs in the manner best suited to his business. The Assessing Officer without making proper enquiries and collecting any material in rebuttal has proceeded arbitrarily in rejecting the claim of the assessee. The learned counsel placed reliance on the decision of the J & K High Court in the case of International Forest Co. v. CIT [1975] 101 ITR 721 in support of the contention that the onus in regard to the suppression of sales was on the revenue. The learned counsel also invited our attention to the written explanations furnished before the authorities in support of the contention that the discrepancies pointed out by the Assessing Officer had been satisfactory explained. 6. The learned counsel further contended that assessee had been paying incentives bonus in the past on the same basis as during the years under appeal. In earlier years also sales made to various persons have been grouped together in order to settle the claim of incentive of some of the dealers as and when they were introduced by them. Assessing Officer was thus not justified in disbelievi....
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....ve bonus. The amount did not tally. Referring to the statement for assessment year 1989-90, the learned D.R. pointed out that in each case there was a difference of Rs. 4 to Rs. 5. This, according to the learned D.R., establishes the fact that assessee has tried to pick up certain sale bills to be included in the case of sales made to other dealers for the purposes of payment of incentive bonus so as to tally the statement seized during the course of search operations. It was accordingly pleaded that the additions made by the Assessing Officer may be confirmed. 8. We have given our careful consideration to the rival contentions. It is by now well-settled that when certain documents etc., are found from the possession of the assessee during the search operations, burden lies on the assessee to explain the nature of the transactions recorded in such documents, statements of books of account. Assessee is duty bound to explain the discrepancy, if any, found on the basis of the seized material vis-à-vis the books of account. However, when assessee furnished an explanation which is sought to be supported by evidence, the onus would then shift back to the revenue. In the case, d....
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....ctively are accounted for in the sales of Sethi General Stores for the purpose of incentive bonus and sales made to Raju Crockery at Rs. 10,872 and crockery Centre Rs. 7,95,534 are accounted for in the sales of M/s Duggal Crockery and sales made to cheap and Best amounting to Rs. 4,23,258 are included in the Capital Crockery Store, then there will be no discrepancy in the case of M/s Duggal Crockery and Capital Crockery Stores. In regard to some discrepancy still remaining in the case of M/s Sethi General Store the assessee has stated that it was due to non-adjustment of certain debit and credit notes. A reconciliation statement has been furnished. It is thus claimed that there does not remain any discrepancy in any of the cases. The argument that the sales of some other parties are to be accounted for in the sales of above-mentioned distributors for the purpose of incentive bonus is indeed an innovative one and certainly afterthought. The fact of inclusion of sales to X in the sales of Y is not borne out of any of Assessee's record. The sale bills are silent and so are other connected papers. It is only the assessee's oral assertion coupled with accommodative yet vague statement o....
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....eligibility of the dealers who are entitled to incentive. The said statement has been seized by the authorized officials during search operation in July 1985. In the case of capital Crockery House, Duggal Crockery House and Sethi General stores the sales of the following dealers are also included in the target figure of these dealers. The details of it are given hereunder: (i)In the turnover of the Capital Crockery House, the basic value of the sales made to Cheap and Bench furniture is also included and it was made through capital Crockery House. (ii)In the turnover of Duggal Crockery, the basic value of the sales made to Raju Crockeries and Crockery Centre are also included. (iii)In the turnover of Sethi General Store, the basic value of sales made to Verma Crockery and feather touch are included. We have maintained register where the figures of the basic value of the sales made through them have been mentioned. From this register a statement showing the basic value of the turnover of various dealers including the basic value of turnover of other details made through them and target figures have been prepared It has been seized during the search operati....
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....entioned above, past history and credits of bonus given to the respective accounts of the dealers. As far as parties connected with the dealers are concerned, there are only 2 to 3 parties attached with a dealer and hence it is not at all difficult to remember their names to identify them with reference to the dealers." 11. confirmation Certificates from Capital Crockery House and Duggal Crockery had been filed before the Assessing Officer. As is evident from the above explanation furnished by the assessee the finding of the Assessing Officer that the "fact of inclusion of sale to X in the sales of Y are not borne in any of the assessee's records" is incorrect and contrary to the explanation of the assessee on record. The books of account of the assessee form part of the seized records. When assessee is giving in writing that he has maintained the records of the dealers whose turnover is included in the turnover of other dealers, it was the duty of the Assessing Officer to verify the claim of the assessee. In the absence of any verification by the Assessing Officer, the finding recorded to the contrary is arbitrary and unjustified. Let us now compare the eviden....
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....and other documents and also files certificates from the dealers affirming the version of the assessee. The Assessing Officer had two options. Either to accept the explanation of the assessee as correct or to make further enquiries. In this case apart from rejecting the explanation of the assessee, Assessing Officer has not made any further enquiry whatsoever. The case of Assessing Officer is based on mere suspicion. Suspicion is mother of enquiry, but it does not take place of proof. If the explanation of the assessee was suspected to be after thought and unreliable Assessing Officer would have discharged his duties properly by making further enquiries. That would serve a dual purpose. Either the suspicion of the Assessing Officer would have been strengthened by the evidence so collected to support the case of the revenue of in the alternative the suspicion would have vanished to the advantage of the assessee. In our view, in this case there was scope for enquiry. For example, Assessing Officer could have made enquiries from the parties whose turnover has been included by the assessee in the turnover of other dealers for computation of incentive bonus and the independent enquiry f....
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....ave treated it as fictitious and thus to have abstained from relying on it. " In the present case, Assessing Officer did not ask the assessee to furnish certificates/confirmations from the dealers whose turnover was included in the turnover of others. The Assessing Officer also did not make any enquiries of his own from such dealers. The taxpayers are not experts so as to judge the mind of quasi-judicial authority. Sometimes assessee considers some evidence to be sufficient to support its claim. If the Assessing Officer thinks otherwise, nothing prevents him in informing the assessee about the inadequacy of the evidence. An Assessing Officer exercising quasi-judicial authority is not supposed to take advantage of ignorance of the assessee's. The job of the Assessing Officer is to make a fair and reasonable assessment and not to fight a ping pong battle of wits with the assessee. A fair and reasonable assessment is possible only by giving a fair and reasonable opportunity to the assessee and if necessary by guiding the assessee as to the evidence that is required in support of the claim made by the assessee. In the present case, assessee having furnished evidence in support....