1. Aggrieved by the order dated 6-2-1992 of the CIT(A) for the assessment year 1986-87 in the case of the assessee-firm M/s. Jewells Emporium, the revenue is in appeal with the objection that the CIT(A) erred in deleting the additions of Rs. 2,29,028.
2. A survey operation under Section 133A of the Income-tax Act, 1961 was conducted on 30-9-1985 at the business premises of the assessee. It is alleged that the assessee did not produce books of accounts relevant to the assessment year 1985-86 and the current cash book was written up to 13-8-1985 only. It is also alleged that ledger for the current year was not prepared and there was no rough cash book or any other record for the period from 13-8-1985 to 30-9-1985. The survey party prepared inventory of the stock with the help of the partner of the firm Shri Suresh Kumar and estimated the total value of stock at Rs. 1,75,000.
The Assessing Officer considered that material and required the assessee to explain the stock position. The asse'ssee stated that the stock as on 30-9-1985 was of Rs. 3,94,897 and not of Rs. 1,75,000. The Assessing Officer therefrom worked out the difference of stock at Rs. 2,29,028 and made addition of the said amount to the income of the assessee under Section 69B of the Act.
On appeal, the CIT(A) found that the entire survey operation was conducted by the Inspector of Income-tax in as much as that he recorded the statement of Shri Suresh Kumar on oath and prepared the inventory of the stock. Therefrom, he observed that the entire exercise was illegal, since the Inspector is neither empowered to take statement on oath nor to make inventory of the stock. He also observed that even if the stock was found short, there could not be any addition under Section 69B. He thereby deleted the addition of Rs. 2,23,897 out of the addition of Rs. 2,29,028. He observed that the Assessing Officer had wrongly computed the difference at Rs. 2,29,028 whereas it was Rs. 2,23,897. Thus, the entire addition on that account was deleted. We have heard the ld. representatives of the parties. We fail to understand as to why this appeal has been filed by the Department. We are at a loss to understand the attitude of the Department in supporting the illegal act of the Inspector of recording the statement on oath of Shri Suresh Kumar and of preparing the inventory of the stock of the silver articles. The Department should have better looked to the conduct of its own officers rather than involving the + in further litigation. The expression "Income-tax authority" appearing in Section 133A inter alia for the purposes of Clause (i) of Sub-section (1), Clause (i) of Sub-section (3) and Sub-section (5), includes an Inspector of Income-tax, if so authorised by any such authority. Under Clause (i) of Sub-section (1), the Inspector can claim facility to inspect such books of accounts or other documents as he may require and it may be available at the place of business. Under (i) of Sub-section (3), he may place marks of identification on the books of accounts or other documents inspected by him and make or cause to be made extracts or copies therefrom. Thus, apparently the Inspector acted beyond the purview of his powers in an illegal manner.
3. Furthermore, we find no propriety in making addition under Section 69B when the stock was found less than reflected in the books of accounts.