TaxTMI 
TaxTMI 
2010 (4) TMI 1140
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....997 and is carrying on business of trading of Pan Parag. The Income-tax Department carried out a search and seizure operation u/s 132(1) on 18.11.1999 at the business premises of the assessee company and residential premises of the directors. During the course of search several receipts showing payment of Octroi duty amounting to Rs. 1,01,000/- on invoices value of Rs. 45,75,000/- were found. The summarised details of those receipts are given by the AO as under :- Date Receipt No. Description Checking time Amount octroi paid (Rs.) Invoice amount of goods (Rs.) Page no. of Annexure 20.7.99 8 Loose pan masala 7.00 pm 25,000(@2%) 12,50,000 1 20.7.99 9 Loose pan masala pan parag! 7.05 pm 19,000(@2%) 9,50,000 2 20.7.99 10 Loose pan masala 7.05 pm 19,000(@2%) 9,50,000 2 20.7.99 11 Loose pan masala 7.15 pm 19,000(@2%) 9,50,000 3 20.7.99 12 Loose Gutkha 7.15 pm 19,000(@4%) 4,75,000 3 1,01,000 45,75,000 5. When asked to explain the assessee replied that Octroi department carried out the surprise checking on 1....
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.... search of the I.T. Department was done on 18.11.99. Till then octroi duty payment of Rs. 1,01,000/- was not recorded in the books; (iv) there were newspaper cutting seized from the premises of the assessee placed at Annexure A-1 page 12 indicating that Shri Nilesh J. Kothari has been caught along with the goods in one Matador No.GJ-I.T.4698 and octroi duty of Rs. 1,00,000/- has been recovered from him; (v) there is a stock difference found when department conducted the search. The difference was as under :- Sr. No. Items Physical qty. As per books Difference in qty. Amount in Rs. 1. Pan parag, 2gm pouch 5,46,000 5,51,000 (-)5,100 8,058 2. Gutkha 2 gm puch 85,500 99,500 (-)10,000 15,800 3. Gutkha 4 gm pouch 76,100 76,400 (-)300 948 4. Card Board Matches 56 58 (-)2 403 5. Pan parag (out) 2 gm 7,38,000 7,50,000 (-)12,000 18,960 6. Pan Parag (out) 4gm 49,500 50,000 (-)500 1,580 7. Was matches 3,352 0 (-)3,352 33,520 Rs.79,266 It showed that the physical stock of the goods did not match wi....
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.... 79,266/- being unaccounted sales resulting from shortage of stock on comparison with the books ld. CIT(A) held that only GP @ 3% at Rs. 2378/- alone could be taxed. 12. Before us, ld. DR submitted that the documents in the form of octroi receipts were found in the search. It is undisputed that octroi duty of Rs. 1,01,000/- was paid by the assessee which is supported by receipts. Such payment is not recorded in the books. Payment of octroi duty related to purchases of the goods valuing Rs. 45,75,000/-. Assessee was not able to show as to which purchases recorded in the books octroi duty payment related. He submitted that payment octroi duty could be in respect of goods purchased and recorded in the books in respect of which no octroi duty was paid at the time of purchases, which is now detected by the octroi department and, therefore, assessee is required to make payment of octroi duty now when he is caught on spot inspection by the octroi department. In this situation, the onus is on the assessee to show that octroi duty payment related to certain specific purchases recorded in the books but octroi duty was not paid at the time of purchases and their import into the city. The s....
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....M/s. A. Ramanlal & Co., for the proposition that even where additional excise duty is paid on account of spot inspection by octroi department, it would not lead to inference that assessee has made purchases outside the books. 17. The ld. DR in rejoinder clarified that date 20.7.99 is the date for payment of octroi duty by the assessee and not the date of purchases as per octroi receipts, on which octroi duty was paid. The ld. DR further pointed out that assessee has failed to co-relate various purchases on which octroi duty was paid with the purchases recorded in the books of account. 18. We have considered the rival submissions and perused the material on record. In our considered view it is not necessary that post search investigation necessarily be done in respect of the evidence found in the search. If documents found in the search are sufficient to fasten the liability then the AO may decide not to make investigation further. The octroi receipts found in the search clearly indicated that there are purchases amounting to Rs. 45,75,000/- on which octroi was not paid. There could be two explanations as pointed by the ld. DR. One is that duty related to purchases which are r....
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....that case entries found recorded in the seized documents could not be construed as either sale or purchase or loan or debt. It was held in that case for affixing additional liability on the basis of seized documents four ingredients are required to be established. They are - (i) name of the assessee, (ii) nature of transaction, (iii) quantum involved and (iv) period of transaction. If any of these ingredients are not inferable from the seized documents then onus is on the AO to fulfill the deficiencies by carrying out post search investigation. If any of the ingredients is missing and cannot be reasonably inferred then it would be called a dumb document and no addition can be made on that basis. 19. In the present case name of the assessee, in respect of whom unaccounted purchases are alleged and octroi duty was charged is not disputed; quantum of transaction is also not disputed which is Rs. 45,75,000/-; that there are purchases are also not disputed. Further they pertained to the block period is also not disputed. It was for the assessee to show that these purchases related to pre-block period. Further correctness of books of accounts for inferring that assessee could not have....