TaxTMI 
TaxTMI 
TaxTMI 
2005 (6) TMI 558
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....f the case, the Tribunal was justified in holding that the purchases of tin plate for manufacture of tins were not made on the basis of weight but were made on the basis of number of component parts ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the value of 28,284 tins was to be added in the income of the assessee ? 4. Whether, on the facts and in the circumstances of the case, there was evidence to justify the finding of the Tribunal that there was suppression of production of 28,284 tins by the assessee ? 5. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in rejecting the evidence led by the appellant in support of its contention that the purchases were made on the basis of weight and not on the basis of numbers ? 6. Whether, on the facts and in the circumstances of the case, the conclusions drawn by the Tribunal against the appellant are perverse, in that no reasonable person could have reached these conclusions on the basis of the evidence on the record of the case ?" 2. The assessment year is 1982-83 and the relevant accounting period is S.Y. 2037. The assessee, a regi....
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....tely preceding year. That, considering direct nexus between the production of oil and oil-cakes, higher percentage of oil-cakes production during the year under consideration supported the conclusion of the assessing authority that the assessee had suppressed production of oil and oil-cakes. He, therefore, urged that the addition made by the AO was required to be restored answering the question raised at the instance of the CIT in favour of the Revenue. 7. Mrs. Soparkar, learned advocate appearing on behalf of the assessee, submitted that the assessee had maintained regular books of account showing complete quantitative details in relation to production of oil and oil-cakes and no specific discrepancy had been found by the AO in the record maintained by the assessee. That books of account duly supported by vouchers and records of production and stock had been produced before the AO. It was submitted that the entire addition was based on presumption that as there was excess production of tins, there must be suppressed production of oil and oil-cakes. Attention was invited to the surprise checks made by Civil Supplies Department as well as examination of record by the Excise Departm....
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....he Tribunal are supported by the evidence which is available in the paper book and no material has been pointed out so as to take a different view of the matter. The Tribunal has taken into consideration all relevant facts for the purpose of adjudicating the issue as to whether there was any suppressed production of oil and oil-cakes resulting in sales outside books and consequently undisclosed income. In the result, it is not necessary to reiterate the reasons and the factors which have weighed with the Tribunal while deleting the additions on this count and there being no infirmity in the order of the Tribunal in relation to this issue, no interference is called for. 10. The question referred at the instance of the Revenue is, therefore, answered in the affirmative i.e., in favour of the assessee and against the Revenue holding that the Tribunal was right in law in deleting the addition of Rs. 54,23,457 made on account of suppressed production of 28,284 tins of oil and also Rs. 12,44,130 on account of suppressed production of 678 tons of oil-cakes. 11. Coming to the reference at the instance of the assessee, though as many as six questions have been referred, the issue is wheth....
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.... tin plates could be sold only to small-scale manufacturers as per Government order and hence the sets and the rates were mentioned in numbers though purchases were, in fact, on basis of weight. The assessee in support of such contention had placed on record various evidences from its own possession, from manufacturer of the tins, certificates from suppliers, etc. The AO had also examined two of the suppliers but thereafter recorded that there was nothing to suggest in the statements that the purchase bills which were very specific and clear as to the nature of goods supplied to the assessee were in any manner incorrect. It is further stated that from the chart supplied by the assessee in almost all cases each component set was weighing about 1,000 gms. or slightly more, after process of soldering and affixing of clip, Kadi and round lid weight would go upto 1,040 gms. or slightly more. He, therefore, rejected the assessee's explanation that the weight of a complete tin would workout to 1,080 to 1,100 gms. and it was not necessary that from each component set, one tin would be produced. He, therefore, worked out the value of 28,284 tins alleged to be suppressed production by ap....
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....ppressed production of 28,284 tins. So far as valuation was concerned, the Tribunal directed the AO to adopt the rate which was applicable for production of the other tins as per books of account instead of applying average rate and restored the matter to AO for this limited exercise. 16. Mrs. Soparkar, learned advocate appearing on behalf of the assessee, invited attention to the explanation tendered by the assessee vide letters dt. 14th Nov., 1984, 26th Feb., 1985 and 11th March, 1986 which were accompanied by various enclosures to submit that there was adequate material on record to show that the purchases were on the basis of weight in kilograms and not on the basis of number of component sets. She invited attention to various certificates issued by the suppliers as well as other similarly situated purchasers to emphasise this fact that though the bills reflected purchases to be by number, in fact the purchases were on the basis of weight. Referring to various tables and charts coupled with the statements of the suppliers, she contended that the entire basis of addition viz., one tin for every component set was erroneous considering the possibility of variance as to weight, th....
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....iew of clear description given in most of the purchase bills it was not inclined to accept the assessee's contention that such tin plates were, in fact, purchased on the basis of weight and the number of component sets was mentioned in the purchase invoices merely to comply with the relevant regulation in force relating to sale and supply of tin plates. Thereafter, the entire order of the Tribunal proceeds on the footing that normally each component set should result in manufacture of one complete tin container for holding excess tin production to the tune of 28,284 tins worked out by the AO. The Tribunal enters into an elaborate exercise on the presumption that weight of each set would be 1,000 gms. Applying the same reasoning the Tribunal also reverses the partial reduction granted by CIT(A). The only relief that the Tribunal has granted is to work out the actual quantum of addition by applying the manufacturing cost per tin by adopting the average cost price at which the other manufactured tins were available to the assessee in place of the cost price adopted by the assessing authority. 19. The least that was expected from the Tribunal was to discuss the inherent strength o....
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.... and this has been done under cover of letter dt. 26th Feb., 1985. The assessee submitted the following evidences : 1. Certificate of Tin Containers Manufacturers Association. 2. Hand-operated Tin Containers Manufacturers Association. 3. Certificate of Taheri Tin Factory. 4. Certificate of Girishchandra & Co. 5. Certificate of Indian Extraction (P) Ltd. 6. Certificate of Mahendra Oil Cake Industries (P) Ltd. 7. A chart in respect of details of tin plate and components showing the name of the seller, bill number, date, quantity, rate per ton, bill amount, factory Avak gate pass number, Avak gate pass date, weight bridge receipt number, weight bridge, weight broker name . 8. Copies of bills of brokers. 9. Certificates in the form of letters and bills from the brokers namely, Motichand & Co. and Dalal Jayantilal Dayalal. We also rely upon the evidence filed during the course of 1981-82 assessment proceedings. We also maintain a soda book for purchase of tin plates and tin components. This indicates that purchases were made on the basis of weight. Soda book is produced herewith". 21. The Court has gone through the certificates produced and it is necessary to note....
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....hed aside the said evidence by stating that the same was tendered at a later stage during assessment proceeding without appreciating that it was only when the assessee was called upon to prove its stand that the necessity arose to produce evidence in support of its explanation. 23. The AO also examined one Shri Nalin Sampatlal Mehta, supervisor of another supplier, and the statement including cross-examination of the said gentleman is available on record. It is not necessary to repeat the gist of the said statement. Suffice it to state that the said statement when read as a whole supports the plea of the assessee. 24. As the record reveals : the assessee also produced (i) the weighment slips of the goods when they were sent for manufacture, (ii) weighment slips when the manufactured goods were received back by the assessee, (iii) gate passes which were issued at the time of dispatch and receipt. The Tribunal has however, not taken the same into consideration and no reason is assigned for ignoring the same. May be that an isolated piece of evidence may not appear to have any importance, but when the entire material on record is taken into consideration, the cumulative effect of th....
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.... must come from the assessee and not from the Department. In cases of high denomination notes, where the business and the state of accounts and dealings of the assessee justify a reasonable inference that he might have for convenience kept the whole or a part of a particular sum in high denomination notes, the assessee prima facie discharges his initial burden when he proves the balance and that it might reasonably have been kept in high denomination notes. Before the Department rejects such evidence, it must either show an inherent weakness in the explanation or rebut it by putting to the assessee some information or evidence which it has in its possession. The Department cannot by merely rejecting unreasonably a good explanation, convert good proof into no proof. It is within the range of these principles that such cases have to be decided". (emphasis, italicised in print, supplied). 26. Applying the aforesaid principles if the order of the Tribunal is tested it becomes abundantly clear that it has merely rejected unreasonably a good explanation but that by itself does not convert good proof into no proof. Once it is found that Tribunal has ignored relevant material on record it....
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....r Revenue was justified in making addition on such count especially when Tribunal itself had recorded in no uncertain terms that there was no production of undisclosed oil and oil-cakes. The Tribunal having failed to address itself in this regard would go to show as an additional factor that the explanation tendered by the assessee was not unreasonable, was not fanciful and was duly supported by evidence and material on record and the Tribunal failed to not only appreciate but even consider the said evidence. 29. It is necessary to record that the assessee had made a specific grievance before CIT(A) to the effect that though statement of the concerned person of M/s Girishchandra & Co. had been recorded by the assessing authority, despite a specific request, no opportunity to cross-examine the said party was offered, and to the contrary the assessing authority had relied upon the said statement. The CIT(A) has mentioned the aforesaid objection in paragraph No. 7.1 of his order. The Tribunal has also recorded the grievance in paragraph No. 10 of its order. However, both the authorities have thereafter not appreciated the significance of the grievance made while confirming the additi....