TaxTMI 
TaxTMI 
2004 (9) TMI 299
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....cum-godown premises at II Main Road, AMPC Yard, Arsikere. The assessee is maintaining day book, ledger, a register called signature book in which the advances paid to agriculturists on different dates are entered and the agriculturists' signatures are taken in the said register. A search was conducted on 8th Jan., 1992 at the business premises of the assessee and also at the residential premises of Shri H.M. Satyanarayana Setty, father of the two male partners. The assessee admitted taxable income of Rs. 56,940 in its return filed for the asst. yr. 1992-93 on 31st Dec., 1992. The RMC Act and bye-laws prescribes certain procedure to be followed by the commission agent. Entry slips are issued by the market committee at the entrance of the gate in quadruplicate of which one is to be retained with the RMC, one with the farmer, one with the commission agent to confirm that the commodity has been displayed in his premises. The commission agent is expected to maintain stock register showing every day arrival position of the commodity with the lot number given to the individual farmer by RMC. The commission agent should also continue to maintain the lot number until the tender and sale is ....
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....rein the name of the commodity belonging to such agriculturists pending auction is to be written. The Department found that the stock register was written only upto June, 1991. As per the AO, there were no documents with the assessee to prove which portion belongs to which agriculturist and in one lot kept by the assessee, it is difficult to bifurcate. The AO concluded that the stock of Rs. 9,81,876 found at the premises of M/s Murali Traders on the date of search represents his own stock, which is not recorded in its books of accounts and the explanation regarding the source also is not satisfactory. The AO added the amount to its total income under s. 69A of the Act. The assessee carried the same unsuccessfully in appeal before the first appellate authority. Now the assessee is in further appeal before the Tribunal. 3. At the time of hearing we have heard Shri G. Lakshmi Narasimhan, learned advocate for the assessee and Shri Y. Rajendra, learned senior representative for the Revenue. The assessee has also filed a paper book, which is placed on record. During argument, the learned advocate for the assessee has pressed only ground no. 4 and 6 out of grounds preferred before the ....
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.... mean suppression of stock unless the same is positively established by the Revenue. At the same time, the stock accounts were updated later on. When the goods/stock of goods returned by the AMPC yard for sale on auction to the farmers itself has created evidence to hold that the assessee is not the owner of the goods in question, but was merely a trustee of the goods. At the same time the details were said to be with one Mr. Murali, partner of the assessee-firm, who was never chosen by the Department to be examined before reaching to a conclusion. This is also an admitted position that the officers of the Department went to the farmers directly and examined them. Farmers claimed the ownership of the goods but not even a single farmer came forward in saying that the goods were actually sold to the assessee or they have nothing to do with the goods or they have received money. The authorities below technically accepted that the goods were returned to the farmers under duly authenticated exit slips issued by the authorities of the APMC yard, then broadly one view is coming out as how the assessee is liable for any addition as has been done in the present case before us. At the same t....
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....rom APMC, it can be construed that the transaction was done under their verification without any independent evidence; the assessee has only his version as proof of this transaction. The alleged owners of the seized stock were small farmers who were returned with the stock with small compensation, though the stock was reduced to dust according to assessee. It is highly improbable that such small farmers who normally take loan from assessee for their day-to-day needs could afford to maintain silence about the loss of their produce in return for a small amount. Though assessee claims that the farmers have written many complaint letters to him, it is abnormal that they did not complain to APMC which is the proper forum for complaints especially in these days when it is observed that the farmers try to cheat these merchants by taking advance from one person but selling the goods to another fellow so that their advance will not be adjusted. Such instances have been noticed in the assessee's as well as his sister-concerns. The assessee claimed that the farmers should be summoned and examined. The inspector was sent to the villages for enquiry. The farmers were mostly illiterate who we....
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....e goods from the farmers and kept the same in the godown. There is also no proof that the goods under dispute were purchased by any other commission agents because for that the assessee is supposed to get a commission as per rules. At the same time, the Revenue has not disputed that the assessee is not a commission agent as the sales-tax authorities have assessed the assessee as a commission agent. No outright purchase can be made by the commission agent in RMC yard and being a registered commission agent, the assessee cannot trade indirectly, as has been alleged by the Revenue. At the same time, the Revenue has not produced any evidence to substantiate its claim that the farmers obtained any loan or cleared their loans because for which the entry should be there in the accounts, if any, maintained by the assessee. This is also not the case of the Revenue that the goods of the farmers were adjusted for the loan advanced, if any, to the farmers. If that would have been the case of the Revenue, then the goods of the farmers cannot be put for auction. It is a normal practice that, if the goods are put for auction, the patties are prepared showing the name of farmers who brought the go....
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....ll these questions and answers are available in the assessment order) From the above, in our view, it is seen that there is a specific denial that the goods in any way belong to the assessee-firm. The learned first appellate authority at p. 18 of its order has specifically mentioned that the assessee is in the business of agricultural products for generation and probably, the most leading business family in the area over a number of years and has further mentioned in para 9(2) as under : "(2) Normally, in the rural set up loyalties are thicker than in places like big towns for various reasons such as long relations, family bondage, middle class ideas about obligations to a friend or benefactor. Many a farmer would help a businessman who have been of some help to him financially or otherwise at some point of time. The farmers who come to the town nearby may occasionally enjoy some hospitality like having a reliable place to sit or stay for some time, keeping valuables and goods purchased from the town till he goes away from the market, occasional adjustment for money needed, etc. For them, an official of the Government (say, income-tax or some other Department) who is not k....