ito Vs. BhasIn Rice and General Mills - Court Judgment

Excerpt:
in all the above four appeals by the revenue the common grounds, except the amount, read as under : "1. on the facts and in the circumstances of the case, the learned commissioner (appeals) has erred in working taxable profits at rs. 3,07,480.2. it is prayed that the order of the learned commissioner (appeals) be set aside and that of the assessing officer be restored.3. the appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed of." the aforesaid grounds have been extracted from the case of m/s bhasin rice & general mills.at the time of hearing it was agreed to by the parties that the issue involved in all these appeals is common and the submissions made by both the representatives of the revenue (except of some more arguments made by.....

Judgment:
In all the above four appeals by the revenue the common grounds, except the amount, read as under : "1. On the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in working taxable profits at Rs. 3,07,480.

2. It is prayed that the order of the learned Commissioner (Appeals) be set aside and that of the assessing officer be restored.

3. The appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed of." The aforesaid grounds have been extracted from the case of M/s Bhasin Rice & General Mills.

At the time of hearing it was agreed to by the parties that the issue involved in all these appeals is common and the submissions made by both the representatives of the revenue (except of some more arguments made by Smt. Rachana Singh in case of M/s Bharat Rice Mills) may be taken as submissions for all the four appeals. Similarly the submission advanced by the counsel for the respondents in case of M/s Bhasin Rice & General Mills may be taken as submissions in all the four cases except his reply to the submissions of Smt. Rachana Singh in case of M/s Bharat Rice Factory. This position is accepted by the Bench as well as the parties.

It was further agreed to by the parties that the submissions will be advanced on the basis of facts and findings in case of M/s Bhasin Rice & General Mills and the same will apply to other three cases also.

Accepting this request the parties were allowed to make their submissions on the basis of facts of M/s Ganesh Rice Mills and M/s Bhasin Rice & General Mills.

Before referring to the submissions of the parties, we are of the opinion that the issue involved in all these four appeals is common and can be decided by finding answer to the following question (framed by us): Question : "Whether, on the facts and circumstances in case of M/s Bhasin Rice & General Mills, can it be said that the order of the Commissioner (Appeals) dated 29-8-1996 passed in consequence upon the directions given by the Tribunal, Chandigarh Bench as per its order dated 28-3-1996, in appeals of aforesaid four respondents is in compliance to those directions of the Tribunal ?" Or, can it be said that the observations of the Commissioner (Appeals) in last part of para 4 of his order dated 29-8-1996, to the effect that "after adding other income like rent and insurance, the total income comes to Rs. 3,07,478, which is taken as total income of the appellant" be said to be justified and in compliance to the directions of the Tribunal, Chandigarh Bench given as per its order dated 28-3-1996, passed in appeal of all four respondents ?" For finding answer to the above questions first of all we would like to state brief facts, which are relevant and have been revealed from the record before us, as under : The brief facts are that all the four respondents were carrying on the business of milling of paddy and consequential sale of rice obtained as a result of milling. During the period to the assessment year 1988-89 the State Food & Supply department had imposed the condition for sale of rice obtained on milling of the paddy by these parties to the Government and this sale was called as levy sale. The sale to Government was at a price lower than the price prevailing in the open market. Since these parties had to submit statements showing purchase of paddy, paddy milled and rice obtained as a result of such milling to the District Food & Supply Officer regularly and were to sell levy rice, the parties, with an intention to avoid sale of levy rice which had to be made at lower price and with intention to earn more profit by selling the rice in the open market, adopted a deceptive and false modus operandi. The modus operandi adopted by M/s Bhasin Rice & General Mills was that instead of showing the milling of whole paddy available during the whole of the year, it showed 18,765 quintals of paddy as having been sold as it is within the district and 13,861 quintals of paddy as having been sold, as it is, outside the State. This information was supplied by the assessee to the District Food and Civil Supplies Controller, Ropar, who, when requested by the IT department, supplied this information as per letter No. N.A. 8-90/10949 dated 26-7- 1990. It was further found that in the statement given to DFCSC, there was no sale of paddy, whereas, on inquiries and as per details filed with assessing officer, it has shown aforesaid sale of paddy as it is, It was found by the revenue, on detailed enquiries, that rice mills were adopting foul means and instead of showing the paddy as having been milled were showing the sale of paddy as it is with the motive of avoiding sale of levy rice to the District Food and Civil Controller-which was at the lower price than the market price, and to earn more profit by selling rice, obtained from the paddy (shown to have been sold as it is but in fact not sold), in the open market at higher price.

The price of paddy, shown as having been sold as it is, but in fact not sold, was brought in the books of accounts by way of pay orders. The money so brought in books of account by way of pay orders was taken out either by taking away the sale price of rice and other by products obtained by milling the paddy (which was claimed to have been sold as it is, but was found to have not been sold) sold in the open market (without bringing the proceeds in the books of account) or by showing the fictitious purchase of rice in cash. In the former method the sale price received in cash was taken away and books were showing the receipt of amount brought only by way of pay orders against the alleged sale of paddy. Whereas in the latter method books show the actual receipt of money by way of pay orders on account of sale of paddy, and taking away of the cash in the garb of purchases (fictitious) of rice for cash, which was never brought in books and if brought in books was shown as having been sold.When the assessment proceedings were taken, the aforesaid parties adopted another method to avoid production of books of account for scrutiny by the assessing officer, and the method so adopted was that all these parties claimed the books having been destroyed as a result of fire (M/s Bhasin Rice & General Mills), as a result of heavy rains (M/s Punjab Rice Mills), as a result of heavy rains in August, 1988 (M/s Bharat Rice Mills) and having been lost (M/s Mahalaxmi Rice Factory). Since the books of accounts in all these cases were not produced the assessing officer came to specific finding that and consequently, the assessment was completed under section 144 of the Income Tax Act, 1961 (hereinafter referred to as Act) and so far as assessment of M/s Bhasin Rice Mills & General Mills is concerned the relevant part of the assessment order is reproduced as under : (The relevant part to assessment orders in other cases are not produced because the decision in case of M/s Bhasin Rice & General Mills will govern these cases also).

Extract from assessment order for assessment year 1988-89 in case of Bhasin Rice & General Mills, Kurali dated 22-1-1991.

The relevant part is contained at pp. 7 & 8 of the assessment order which is extracted below: "In the balance sheet the assessee has shown advance from consignees Ms. Pawan Kumar Neeraj at Rs. 18,63,820. It appears to be an advance against the rice sent on consignment should have been reflected by the assessee as its closing stock in the trading account. Closing stock has been shown only at Rs. 1,42,885. This gives a reflection of the devious nature of the advance as also as indication of suppression of closing stock.

As per information supplied by the District Food & Civil Supplies Controller, Ropar vide his letter No. NA 8-90/10949 dated 26-7- 1990 the assessee sold paddy as under : As already discussed above, there was a scandal wherein paddy was shown to have been sold but in fact the paddy was milled and the by-products obtained therefrom were sold in the open market, either outside the books of account or by inflating purchases to that extent. The alleged sale proceeds of paddy were introduced by the parties in their books of account but in fact it was introduced under one guise or the other.

Since no break-up of the sale price of paddy has been given by the assessee, it has to be estimated on the basis of reserve price fixed by the Govt. plus indicate charges generally amounting to Rs. 20 per qtl.

plus gross profit shown.

As regards the yield of rice, rice bran, phuk and rice husk, heavy additions have been made by the assessee in comparison to the yield fixed by the Punjab Agricultural University, Ludhiana and the other concerned departments. In making the estimate this aspect has also to be taken into consideration which is estimated at Rs. 3,50,000. .

No qualitative and quantitative details of paddy and its by-products are maintained by the assessee. The assessee sold 32,611 qtls. of paddy. The average cost price including incidental expenses, tax and the GP shown, was in the proximity of Rs. 180 per qtl. price of 32,611 qtls. of paddy @ Rs. 180 per qtl. works out to Rs. 68,69,980 which was sold outside the books of account and this fact has to be kept in view in estimating the assessee's total income.

As per trading account filed by the assessee along with the return of income total purchase of paddy, rice, bardana, phuk, polish have been shown at Rs. 1,32,-54,694. No bifurcation of paddy, rice and other by-products has been given in the trading account. As per DFSC's letter No. 10949 dated 26-7- 1990 total purchases of paddy made by the assessee were 46058 qtls. which valued at Rs. 72,90,000 @ Rs. 180 per qtl. approximately. If value of 46058 qtls. of paddy which comes to Rs. 59,64,694 (say Rs. 60,00,000) (1,32,54,694 -72,90,000). Purchase of rice and other by-products by a rice seller is quite an abnormal feature. Obviously fictitious purchases to this extent of Rs. 59,64,694 have been debited by the assessee to its trading account to cover-up the byproducts extracted out of the paddy shown as sold but actually shelled. I take this amount as a yard-stick to arrive at the concealment of income involved in this case. As per information from DFSC the assessee was left with no closing stock of paddy whereas the assessee has shown its closing stock at Rs. 20,60,836.

Considering all the facts and circumstances of the case, discussed in the foregoing paragraphs, assessee's total income is estimated at Rs. 64,00,000 which will cover every possible leakage of revenue on account of bogus sales of paddy shown, sales of rice and other by-products procured out of the paddy milled but low yield shown, which was sold outside the books of account, expenses of inadmissible nature, unsecured loans introduced, unexplained investment, etc.

All the aforesaid four respondents were in appeal before the Commissioner (Appeals) but, what were his exact findings is not known because the parties have not filed the orders of the Commissioner (Appeals); however, since all the four respondents were appellants before the Tribunal as per ITA No. 1127/Chd/1992 (M/s Bharat Rice Mills), 1129/Chd/1992 (M/s Bhasin Rice & General Mills), 1128/Chd/1992 (M/s Punjab Rice Mills) and, 1130/Chd/1992 (M/s Mahalaxmi Rice Factory) (D.R.M.) (give all Nos.) whereas, the revenue was in appeal only in case of M/s Mahalaxmi Rice Factory and M/s Punjab Rice Mills, it is gathered that Commissioner (Appeals) might have allowed some relief only in case of M/s Mahalaxmi Rice Factory and M/s Punjab Rice Mills.

Whatever may have been the case it is clear from the order of the Tribunal dated 28-3-1996 that the Commissioner (Appeals) had : (i) Upheld the action of the assessing officer so far as ex parte orders were concerned, i.e. invoking of provisions of section 144 was upheld.(ii) In case of M/s Punjab Rice Mills and M/s Mahalaxmi Rice Factory, Commissioner (Appeals) had allowed reduction to the extent of Rs. 11,00,000 and Rs. 5,50,000 respectively and it is this relief against which revenue was in appeal. Four respondents were in appeal before the Tribunal against the ex parte orders as well as quantum which has been determined by the assessing officer and confirmed by the Commissioner (Appeals) as under The Hon'ble Tribunal as per its order dated 28-3-1996, set aside the orders of the Commissioner (Appeals) in all the four cases and restored all the cases to the file of the learned first appellate authority to pass fresh orders after due opportunity to the assessees and in terms of directions given by the Tribunal in its order dated 22-6-1993 while deciding Miscellaneous Petition in case of M/s Ganesh Rice Mills, (arising out of ITA No. 1502/Chd/1990 for assessment year 1988-89 (in case of M/s Ganesh Rice Mills).

The Commissioner (Appeals) while passing order, in compliance to the directions of the Tribunal given as per order dated 28-3-1996, determined the total income of M/s Bhasin Rice & General Mills only at Rs. 3,07,478. The relevant part of his order reads as under : Extract from order of the Commissioner (Appeals) in case of Bhasin Rice & General Mills, passed in consequence upon directions given in the order of the Tribunal dated 28-3-1996 The Hon'ble Tribunal, Chandigarh Bench, Chandigarh vide their order dated 28-3-1996 has disposed of the appeal of the appellant (ITA No.1129/Chd/1992) along with the appeals of M/s Bharat Rice Mills, Santemajra (ITA No. 1127/Chd/1992), M/s Mahalaxmi Rice Factory, Chhajumajra (ITA No. 1130/Chd/1992) and M/s Punjab Rice Mills (ITA No.1128/Chd/1992), and two cross-appeals by the revenue in the cases of M/s Punjab Rice Mills and M/s Mahalaxmi Rice Factory, all relating to the assessment year 1988-89 by a single order. The matter in all the cases has been restored to the file of the first appellate authority to pass fresh orders, after due opportunity, in terms of the directions given by the Hon'ble Tribunal in its order dated 22-6-1993 in the case.

of M/s Ganesh Rice Mills (ITA Nos. 1502 and 1720/1990 dated 20-8-1991) for assessment year 1988-89.

2. Facts in the case of the appellant, in brief, are that due to non-production of books of account, the assessing officer passed ex parte order and assessed income of the appellant to the best of his judgment at Rs. 64,00,000. This income of Rs. 64,00,000 was estimated by the assessing officer on the ground that the appellant had been unable to prove the source of the amounts credited in its books of account on account of the alleged bogus sale of paddy and suppression of yield in the manufacturing process, etc. The appellant preferred appeal and my learned predecessor upheld the action of the assessing officer. He gave this finding on the basis of order of Hon'ble Tribunal, Chandigarh Bench, Chandigarh dated 20-8-1991. (ITA No.1502/Chd/1990 and ITA No. 1729/Chd/1990) in the case of M/s Ganesh Rice Mills, Kurali for assessment year 1988-89. After that in the miscellaneous petition of M/s Ganesh Rice Mills, the matter was reheard by the Hon'ble 'Tribunal and vide its order dated 22-6-1993, the matter was sent back to the first appellate authority with the direction that while working out the total income of the assessee, the addition should not be made twice-one by way of sale of paddy as shown by the assessee and second on account of sale of rice as contended by the department.

3. Opportunity to the appellant was given as per direction of the Hon'ble Tribunal (Para 1 of this order). Shri Sudhir Sehgal, counsel for the appellant filed before me the details of paddy account, yield of rice bran, phak and husk and the income was computed as per directions of Hon'ble Tribunal in the case of M/s Ganesh Rice Mills (supra.). These details and computation of income were sent to the assessing officer for verification. The assessing officer vide his letter No. 223 dated 18-6-1996 has calculated the income of the appellant at Rs. 1,68,528 as per directions of the Hon'ble Tribunal.

However, on going through the calculations it was thought fit to call the assessing officer to obtain some clarifications and after making the following amendments to the calculations submitted by the appellant.

4. The sale value of rice bran @ 213.62 per quintal had been taken at Rs. 2,93,715 whereas it should be taken at Rs. 3,71,263. On the other hand, the sale value of phak at Rs. 125 per quintal had been taken at Rs. 1,75,787, when it should be taken at Rs. 1,30,020. In the husk account the sale has been shown at 7281.120 quintals whereas it should be 5460.84 quintals and after applying the rate of Rs. 15 per qtl. the sale value would be Rs. 81,912.60 ps. These variations would change the figure of sales realisation at Rs. 75,33,791 instead of Rs. 75,29,314.

This would consequently change the profit from milling of paddy which would be Rs. 5,62,434 as "expenses debited to trading account as per books including value of bardana consumed for sale of products". As far as expenses debited to trading account as per books of account are concerned, these are of Rs. 2,81,627 and have been allowed but it is not known as to how the appellant has included bardana consumed in his trading and P&L a/c. Additional expenses in respect of extra milling are being allowed separatel and, therefore, no further expenses on bardana consumed debited to trading account can be allowed. On the other hand the appellant had claimed additional expenses of Rs. 92,908.

These expenses have been allowed at Rs. 4 per bag containing 65 kgs. in each bag as additional expenses for carrying out milling of the paddy.

This would amount to Rs. 2,13,366. This would result in a profit of Rs. 5,16,040 and after deducting depreciation as claimed and the deduction under section 80HHA, total income like rent and insurance, the total income comes to Rs. 3,07,478 which is taken as the total income of the appellant.

5. As regards the extra gain of Rs. 10,00,000 on account of Government levies, etc., is concerned, the Distt. Food & Supplies Controller has given a certificate stating that no dues of rice levies were found to be short in the case of the appellant. . .

6. As regards other points, the Hon'ble Tribunal has held that "we express no opinion and the learned Commissioner (Appeals) is directed to consider those afresh". One of the basis of estimation of income was also credits in the name of M/s Vandna Bhasin and Ms. Rakesh Bala amounting to Rs. 41,000 and Rs. 27,000 respectively which were not verifiable at the time of original assessment. The appellant's counsel has filed certificates from these creditors. Both are assessed to income tax. Ms. Vandna is assessed at Ropar at GIR No. 110-V and Ms.

Rakesh is assessed with Income Tax Officer, Barnala at GIR No. 1256-R.The assessing officer is directed to verify the genuineness of the same and if found to be correct, no action would be called for.

7. As regards charging of interest under section 217 is concerned, the same may be recalculated after giving effect to this order.

It is against this order of the Commissioner (Appeals) dated 29-8-1996, in case of M/s Bhasin Rice & General Mills wherein the Commissioner (Appeals) determined the total income at Rs. 3,07,478 which is before us by way of revenue's appeal. The revenue's appeals in other three cases are also against the similar orders of the Commissioner (Appeals), i.e. against the determination of total income at Rs. 3,33,320 (In case of M/s Mahalaxmi Rice Factory) at Rs. 2,68,650 (In case of M/s Bharat Rice Mills) and, at Rs. 3,03,555 (In case of M/s Punjab Rice Mills).

It was in view of these facts and circumstances that the learned departmental Representatives, after referring to the orders of the Tribunal Chandigarh Bench in Miscellsneous Petition of M/s Ganesh Rice Mills arising out of ITA No. 1502/Chd/1990 for assessment year 1988-89 dated 22-6-1993, decision in case of M/s Ganesh Rice Mills in ITA No.1502/Chd/1990 for assessment year 1988-89, dated 20-8-1991, decision of the Tribunal in case of four respondents before us in ITA Nos. 1127, 1128, 1129, 1130/Chd/1992 for assessment year 1988-89, dated 28-3-1996 and the assessment orders in all the four cases, submitted that : (i) So far as the context and scope of directions, given in Tribunal's order, disposing of Miscellaneous Petition of M/s Ganesh Rice Mills, dated 22-6-1993 and the Tribunal's order dated 28-8-1991 in original appeal of M/s Ganesh Rice Mills are concerned it is final that : (1) The onus to prove that the return of income filed by the assessee as well as the particulars of accounts are correct and should be accepted by the revenue is on the assessee.

(2) It has been categorically held by the Tribunal, in para 16 of its order that, (a) The assessee has not discharged the onus cast upon it to prove the correctness of the details such as sale of paddy, much less even the initial onus.

(b) That the ST XXII Forms filed by the assessee were found by the Sales-tax department to be ungenuine.

(c) That partners of the purchaser (To whom the assessee had claimed to have sold paddy) had categorically denied the transaction.

(d) The Tribunal has not accepted the probability of bringing cash by the alleged purchaser of paddy from Amritsar to Kurali.

(e) Respondent's claim of having sold the paddy (as it is) was found to be false.

(f) The Tribunal had categorically held that all the evidences on record available at the assessment stage and which have been confronted to the assessee leac to one and only one irresistible factual inference that the assessee has hot sold any paddy and the sale entries were fictitious.

(ii) According to the learned departmental Representatives the gist of the findings of the Hon'ble Tribunal, as per para 15 and 16 of its original order in case of M/s Ganesh Rice Mills, was that the assessee's version of having sold the paddy to parties at Amritsar to the extent of Rs. 33,87,550 was found to be false, the money involved in purchase of pay orders (In the garb of sale price of paddy) totalling to amount of Rs. 33,87,550 was assessee's own undisclosed money available outside books of accounts, and the addition of Rs. 33,87,550 made by the assessing officer by considering the amount utilised for purchasing the pay orders to that extent as assessee's undisclosed income under the deeming provisions of 68/69A of the Income Tax Act, had been confirmed.

(iii) The learned departmental Representative further submitted that so far as directions of the Hon'ble Tribunal given as per para 5 of its order dated 22-6-1993, passed while disposing Miscellaneous Petition of M/s Ganesh Rice Mills, are concerned the Tribunal had nowhere observed or held or directed that its findings as per para 16 of the order dated 20-8-1989 whereby the addition of Rs. 33,87,550 made under section 68 had been confirmed should be reconsidered or deleted. According to the learned departmental Representative the directions given by the Tribunal should be considered in the context of the alternative plea of the assessee, which, according to the learned departmental Representative, was that there is double addition to the extent of Rs. 33,87,550 by way of bringing of sale price of alleged sale of paddy in the books of accounts (by the assessee itself) and secondly another addition to the same extent having been made by the assessing officer considering the sale price of rice and byproducts obtained from milling of the paddy (shown by the assessee as having been sold, but in fact not sold) as having not been brought in the books of account. According to the learned departmental Representative it was nowhere in Miscellaneous Petition, that addition made under section 68/69A was double addition.. The learned departmental Representative vehemently stressed that in fact the assessee had not at all objected or pleaded against the addition under section 68/69A of Rs. 33,87,550 having been made on account of involvement of assessee's undisclosed income in purchase of pay orders to this extent and bringing the same in the books of accounts, under the garb of alleged sale price of paddy.

(iv) The gist of departmental Representatives arguments was the directions of the Tribunal given in M/s Ganesh Rice Mills cannot be interpreted so as to mean that it had directed the Commissioner (Appeals) to reconsider the question of addition of Rs. 33,87,550 made under deeming provisions of section 68/69A of the Act. The Tribunal had not either reconsidered or reversed its findings given in para 15 and 16 of its order dated 28-8-1991 whereby the addition made under the deeming provisions of section 68/69A, at Rs. 33,87,550 had been confirmed.

The departmental Representative further submitted that in view of the above interpretation of the directions of the Tribunal and the context and scope of two orders of the Tribunal (supra) in case of M/s Ganesh Rice Mills and the fact that the assessee had not challenged the Tribunal's findings for confirmation of addition under section 68/69A of the Act before the High Court either by way of reference under section 256(1) or under section 256(2) or by way of writ or by way of appeal, the findings of the Tribunal have become final and cannot be ignored or brushed aside.

Before proceeding further the learned departmental Representative submitted that in the present appeals, which are against the orders of the Commissioner (Appeals) passed in compliance to the directions of the Tribunal, (which are same as were in the case of M/s Ganesh Rice Mills), the Tribunal is concerned only to the aspect relating to the compliance by Commissioner (Appeals) to the directions of the Tribunal, i.e., whether the orders passed by the Commissioner (Appeals) are in accordance with the directions of the Tribunal or not and what had happened in M/s Ganesh Rice Mills-Subsequent to the Tribunal's directions; is neither relevant nor a subject-matter for the consideration of the Tribunal. The learned departmental Representative therefore, submitted that if department had not appealed against the order of the Commissioner (Appeals) in M/s Ganesh Rice Mills passed after the Tribunal's directions it doesn't mean that the finding in that order of the Commissioner (Appeals) may be accepted as universally correct proposition of law or of fact and revenue has no right, under the law, to object to such findings in other cases.

Having said as above, the learned departmental Representatives after referring to the assessment order in case of M/s Bhasin Rice & General Mills, submitted that the income estimated by the assessing officer at Rs. 64,00,000 has to be taken as consisting of the following : (i) Addition of Rs. 58,69,980 have been made under the deeming provision of sections 68/69A by considering the investment to this extent in purchase of pay orders or by way of cash brought in books in the garb of sale price of 32,611 quintals of paddy. Referring to p. 7 of the assessment order the learned departmental Representative submitted that since the assessee, had not produced the books of accounts the information supplied by the District Food Supplies Controller, which was based on statement filed by the assessee, has to be taken to be correct and according to the information supplied the assessee had claimed to have sold 32,611 quintals of paddy (18,765 quintals of paddy sold within the districts and another 13,846 quintals of paddy sold out of State) but, in fact no such paddy was sold. The learned departmental Representative further submitted that since the onus to prove that the assessee had sold the paddy as it is or if not sold then to prove the source of the amount involved in purchase of pay orders or brought by cash (if so) in the books of account in the garb of sale price of paddy (claimed to have been sold as it is) lay on the assessee. It was for the assessee to substantiate its claim. Simply by avoiding the production of books the assessee cannot be allowed to go scot-free. Respondents having failed to discharge this onus, assessing officer was quite justified in making addition under section 68/69A and the same was rightly confirmed by the Tribunal, but Commissioner (Appeals) has deleted the same without having jurisdiction to do so.

Cutting short his arguments the learned departmental Representative submitted that since the directions given by the Tribunal in the cases of present four respondents are same as were given in the case of M/s Ganesh Rice Mills, and because none of the respondents has filed'any evidence for having challenged the Tribunal's order dated 28-3-1996 before the Hon'ble High Court either by way of a reference or writ of appeal, the following facts/findings have become final and stand accepted by the respondents : (a) Since the addition made under section 68/69A of the Act amounting to Rs. 33,87,550 in case of M/s Ganesh Rice Mills had been confirmed by the Tribunal, the similar additions as detailed below, in the present four cases has to be taken as having been confirmed by the Tribunal and order of the Tribunal confirming the addition has become final.

(b) The learned departmental Representative further submitted that the scope of directions given by the Tribunal in case of M/s Ganesh Rice Mills by accepting its alternative plea, and which has to be applied to the present cases also, is that addition on account of undisclosed investment made under section 68/69A stands confirmed and can't be disputed by any authority. According to the learned departmental Representative, the direction were in relation to that part of the order of the assessing officer, which may have resulted in double addition by consideration of the sale price of rice and other by products obtained as a result of milling of paddy (which was claimed by the assessee as having been sold) and not brought in books.

The learned departmental Representative therefore, submitted that if we consider the correctness of the order of the Commissioner (Appeals) dated 28-3-1996, which is under appeal in the, present proceedings, in the light of scope of directions given by the Tribunal, which are same and similar to the directions given in case of M/s Ganesh Rice Mills, the first part of the order of the Commissioner (Appeals) determining the additional income liable to be added by considering the price of the paddy (claimed to have been sold but, not sold) and the sale price of rice and other by-products obtained as a result of milling of that paddy was correct because under the accounting provisions it was the total sale of rice and byproducts which was to be credited in the books but, since an amount to the extent of Rs. 58,69,980 had already been credited in the books in the garb of sale price of paddy it was only the difference between the two which was to be added to the trading results, but, one should keep in mind that this was not the total income of the assessee because addition to the extent to Rs. 58,69,980 made under section 68/69A by considering the involvement of assessee's undisclosed money (having been brought in books in the garb of sale price of paddy by way of pay orders and taken away at the time of actual sale of rice), as assessee's undisclosed income from undisclosed sources stood confirmed by the Tribunal and therefore, assessee's total income should have been mentioned by the Commissioner (Appeals) at Rs. 61,77,458 as against Rs. 3,07,478 mentioned in para 3 of his order. The departmental Representative therefore pleaded that the findings of the Commissioner (Appeals) to the extent of determining the total income of the appellant are erroneous and may be modified so as to read as "Total income of the appellant comes to Rs. 61,71,478. " The counsel for the respondents however tried to stick to the arguments advanced before the Tribunal in all these cases and also tried to borrow the arguments advanced on behalf of the assessee in case of M/s Ganesh Rice Mills. The counsel further submitted that scope of directions given by the Tribunal, while deciding Miscellaneous Application of M/s Ganesh Rice Mills, and subsequent directions given by the Tribunal while deciding the appeals of all the four present respondents, was that the addition made under section 68/69A, or the issue relating to addition under section 68/69A was to be set aside/remanded back to the Commissioner (Appeals) for fresh disposal in view of specific directions that such addition may be deleted if found to be double and since the Commissioner (Appeals) have found the addition having been made under section 68/69A as double addition once by way of credits brought by the assessee in the books, (by way of pay orders, on account of sale of paddy) and secondly by the assessing officer by considering the total sale price of rice and other by-products obtained from the milling of that paddy and under section 68/69A. The counsel therefore, submitted that Commissioner (Appeals) was justified in adding only the difference between the sale price of rice and other by-products obtained from milling of the paddy and the sale price of paddy (which was already brought in the books of account by the assessee by way of pay orders).

The counsel therefore submitted that there was nothing wrong in the findings of the Commissioner (Appeals) in orders passed in consequence upon the directions given in the order of the Tribunal-in all the cases of all the four respondents.

In support of his stand the counsel relied on the decision of the Commissioner (Appeals) dated 15-6-1994 in case of M/s Ganesh Rice Mills for assessment year 1988-89, which was passed in consequence upon the directions of the Tribunal given as per Tribunal's order dated 22-6-1993 passed in Miscellaneous Application and submitted that since the order of the Commissioner (Appeals) has not been appealed against by the revenue the context,. scope and outcome of the directions of the Tribunal stands confirmed/finalised and the Tribunal should follow the same in present cases also. The learned counsel further submitted that on merits also, there cannot be any additions under section 68/69A of the Act. Reliance was placed on the Third Member decision of Tribunal, Chandigarh Bench in case of M/s Bansal Rice Mills, Amloh, copy of which has been placed on record.

Alternately, the counsel submitted that only the peak amount of the pay orders, i.e., credits if at all any addition is required to be made on this account may be made.

In rejoinder to the counsel the submissions of the counsel for the assessees learned departmental Representative submitted that the Tribunal has nowhere-either in paras 5 & 6 of the order in M/s Ganesh Rice Mills, Miscellaneous Application nor while giving directions in its order in case of present respondents dated 28-3-1996; has spoken either for deletion of or to set aside the addition having been made under section 68/69A of the Act. In fact, the Tribunal after having confirmed the addition of under section 68/69A in the original order, has not discussed it, from any angle or for any purpose in the order passed in M.A. On the contrary the Tribunal has directed the Commissioner (Appeals) to pass fresh order in terms of its decision dated 22-6-1993 given in its order for disposing of the Miscellaneous Application in case of M/s Ganesh Rice Mills. According to the learned departmental Representative the addition made under sections 68/69A have since become final both in case of M/s Ganesh Rice Mills as well in cases of all the present four respondents assessees.

Coming to the decision of the Commissioner (Appeals) in case of M/s Ganesh Rice Mills dated 15-6-1994, made in para 11-specially the observations while arriving at as to which addition was the double addition, learned departmental Representative submitted that the learned Commissioner (Appeals) committed a mistake in observing that "It is also an admitted fact by the assessing officer that addition of Rs. 33,87,550 made on account of unexplained cash credit represents only ploughed back profits on sale of rice". According to the learned departmental Representative, had it been the case of the revenue then there was no necessity of the assessing officer to make addition ilinder section 68/69A. The learned departmental Representative once again, reverting to para No. 5 of the original order of the Tribunal in M/s Ganesh Rice Mills dated 20-10-1991 where the para Nos. 2 & 3 of the assessment order were extracted emphatically and strongly submitted that there were three amounts (additions) in that case, such as (ii) Addition of Rs. 42,11,331 (out of which credit to the extent of Rs. 33,85,555 was given) on account of total sale price of rice and other by-products obtained by milling the paddy which was claimed by the assessee to have been sold but, in fact not sold, because that sale price of rice was not brought in the books of accounts.

(iii) The amount of Rs. 33,87,560 which already should be credited in the books having been brought by way of pay orders and in the garb of sale proceeds of paddy.

The learned departmental Representative further submitted that it was in the context of the additions at serial No. (ii) that the Tribunal first (as per para 17 of the original order) set aside the issue relating to second addition, but when assessee claimed this addition in miscellaneous application to be double than the Tribunal, while deciding miscellaneous application, gave the specific directions which again related to addition at serial (ii) and (iii). The learned departmental Representative reiterated, time and again, that combined reading of both the orders of the Tribunal in case of M/s Ganesh Rice Mills as well as the order in cases the respondent assessees leads to the one and the only one irresistible conclusion that addition under section 68/69A had become final and order of the Commissioner (Appeals) determining total income without including that addition are not in consonance with the direction of the Tribunal. In view of these submissions the learned departmental Representative submitted that the Tribunal's hands, while deciding the present appeals, are not tied down, and the Tribunal should decide the issue in the light of correct context and scope and outcome of the directions of the Tribunal.

According to the learned departmental Representative failure of the revenue to file appeal against the order of the Commissioner (Appeals) in case of M/s Ganesh Rice Mills dated 15-6-1994 cannot be interpreted as acceptance of his action as a universal proposition of law. The learned departmental Representative therefore submitted that order had been passed on misconception and even otherwise the revenue is not barred from differentiating the same.

With regard to the Third Member decision of Chandigarh Bench in case of M/s Bhansal Rice Mills, the learned departmental Representative submitted that the decision of the Tribunal in that case was in the regular course of appeal filed under section 253 of the Act i.e., that order was in original appeal and in exercise of Tribunal's vide powers available under section 254(1) of the Act, however, in the present appeals the issue is only with regard to the context and scope of the directions of the Tribunal and compliance thereof by the Commissioner (Appeals). Explaining further the learned departmental Representative submitted that in present appeals the scope of Tribunal's powers is only to find out as to whether the orders passed by the Commissioner (Appeals) consequence upon directions of the Tribunal (the directions as were in the case of M/s Ganesh Rice Mills) wherein the Commissioner (Appeals) has determined the total income of the respondent M/s Bhasin Rice & General Mills at Rs. 3,07,478 is in compliance to or is, in consonance with the directions of the Tribunal or not. According to the learned departmental Representative the issue as to whether addition under section 68/69A could be made or sustained is not before the Tribunal in the present appeals, because that addition has already become final on account of confirmation of the source by the Tribunal and failure of the respondent to appeal against the order of the Tribunal. The learned departmental Representative, therefore, submitted that decision in case of M/s Bansal Rice Mills, is not applicable to the issues involved in present appeals.

Coming to the alternate plea of the counsel that, if at all, any additions is to be sustained, it should be of the peak amount, the learned departmental Representative submitted that this argument could be accepted only if respondents were able to establish from the books of accounts that the day, when they purchased the drafts, the sale proceeds of rice were available with them, otherwise this plea also cannot be accepted and in the present cases since all the respondents failed to produce the books of accounts intentionally and also having failed to establish as above, the benefit of concept of peak amount also is not available to them.

We have considered the rival submissions, facts and circumstances of the cases, both the decisions of the Tribunal in case of M/s Ganesh Rice Mills.... original order dated 28-6-1991 and order in miscellaneous application dated 22-6-1993, combined common order of the Tribunal in case of all the respondents (four assessees) before us dated 28-3-1996, orders of the Commissioner (Appeals), which are the subject-matter of appeal before us and passed in consequence upon directions of the Tribunal dated 28-3-1996; decision of Hon'ble Tribunal, Chandigarh Bench (Third Member) in case of M/s Bansal Rice Mills, and the decision of the Commissioner (Appeals) dated 15-6-1994 passed in consequence upon directions of the Tribunal given in the order deciding of M/s Ganesh Rice Mills, miscellaneous application on 22-6-1993 with utmost care and applying all the faculties available and after careful consideration of the rival submissions and the totality of the facts and circumstances, we are of the opinion that to arrive at a substantial judicious decision and to find answer to the question, already framed by us in para No. 5 of this order, it will be useful if we first consider the context in which the directions in case of M/s Ganesh Rice Mills were given, scope of directions so given and scope of directions of the Tribunal given in cases of four respondents before us (in present revenue's appeals) as per order dated 28-3-1986 and for that purpose we, even at the cost of repetition and or lengthy order, would like to reproduce the parts of these orders, which are relevant and have a bearing on the outcome of the present appeals, of the aforesaid orders.

Ex-I Extract from onginal order of the Tribunal m ITA No. 15021Chd11990 for assessment year 1988-89 in Ganesh Rice Mills, Kurali, dated 20-8-1991 "5. As regards assessee's agitation, paras 2 & 3 of the assessment orders stands reproduced hereunder for ready reference '2. During the course of assessment proceedings it was noticed that the assessee had shown sales of paddy to M/s Rama Krishna Rice & General Mills, Cumtala, Amritsar as under and had received the payments mentioned below In order to verify the genuineness of the paddy sales, the assessee was required to produce the evidence in support of the same. The assessee produced the following documents in support of the genuineness of the paddy sales made to M/s Rama Krishna Rice & General Mills, Amritsar : (i) Photostat copies of ST-XXII form bearing No. HH 561934 to 561943 and HH No. 561982 to 561986.

(ii) Photostat copies of the gate passes issued by the assessee to the following trucks, which were used by the assessee for the transportation of paddy from Kurali to Amritsar : (iii) Photostat copies of letter received from M/s Rama Krishna Rice & General Mills, regarding returning of empty bags on 20-10-1987, 4-11-1987, 7-11-1987, 5-1-1988 and 15-1-1988.

(iv) Photostat copies of letter from M/s Rama Krishna Rice & Gen.

Mills, Amritsar regarding receipt of paddy as under In order to verify the genuineness of the ST-XXII forms furnished by the assessee, photostat copies of the same were sent to the Asstt.

Excise & Taxation Commissioner, Amritsar and he was also requested to confirm whether M/s Rama Krishna Rice & Gen. Mills, Amritsar have accounted for the above paddy purchased by them. He has informed that only fifteen ST-XXII forms bearing No. G-316411 to 316425 were issued to M/s Rama Krishna Rice & Gen. Mills, Amritsar on 16-12-1987 and no ST-XXII forms, which were supplied by the assessee, were issued to the Amritsar party. It was further intimated by the A.E.T.C. that the ST-XXII forms supplied by the assessee were actually issued by the A.E.T.C., Ferozpur. When confronted with these facts, the assessee vide his letter dated 13-8-1989 has stated that since STXXII forms had been supplied by M/s Rama Krishna Rice & Gen. Mills, to them, these are genuine forms and it is not the responsibility of the assessee to check as to from where the purchaser had received them and that according to the general practice in the market, whenever a registered dealer buys the goods within the State of Punjab, it supplies ST-XXII forms and the seller accepts the same.

To further verify the genuineness of the paddy sales, the assessee was asked to produce the G.R.'s which were issued by the Truck Operators Union, Kurali, Besides, the assessee was asked to produce the truck drivers along with the log-books of the truck through which the goods were sent to reply to this, which shows that the goods were never transported from Kurali to Amritsar.

Similarly, a reference was also made to the Distt. Food & Supplies Controller, Amritsar, to verify the genuineness of the paddy sales, who has intimated that the goods were not received by M/s Rama Krishna Rice & Gen. Mills, Amritsar. In this connection the D.F.S.C., Amritsar had further intimated that above party of Amritsar has denied of having received the paddy, as it has been stated by Sh. Subhash Chander s/o Sh. Dwarka Nath, partner of the said firm on 27-6-1989. Accordingly, the summons were issued for 12-10-1989 to Sh. Subhash Chander s/o Sh.

Dwarka Nath partner of the Amritsar party, but the same were received back with the postal remarks that "on going time & again addressee was not found available.

Similarly, summons were also issued to the President, Truck Union, Kurali for 12-10-1989. In response to which Sh. Mohan Singh, Munshi of the Truck Union attended but he failed to produce any record of office copies of the G.R.'s vide which the assessee stated to have transported the paddy. The assessee was informed to attend the office on 12-10-1989 for cross-examining the witness, who attended but do not cross-examine the said Sh. Mohan Singh. The assessee was also informed to obtain dasti summons and produce a letter dated 17-10-1989 signed by one Sh.

Raghbir Singh for President, Truck Union, Kurali, stating therein that the union was not in existence during the period relevant to the assessment year under consideration and the owners were plying their trucks themselves and no record was available with them. However, the assessee did not produce the truck drivers and their log books and hence it has failed to discharge its onus to prove the genuineness of the paddy sales.

From the above, it is clear that the assessee entered bogus sales for some ulterior purpose mainly to introduce its unaccounted money in the books of accounts in the garb of these fictitious sales. At the same time the paddy represented by these sales have been apparently milled by itself and much more profits have been derived by avoiding the payment of purchase tax and supply of levy rice to the Government.

However, the assessee vide this office letter dated 28-3-1990 was intimated and asked to explain as to why the various amounts introduced by it in the account books in the garb of bogus paddy sales may not be added to the taxable income. In response to this the assessee filed a written reply on 30-3-1990, stating therein that the party of Amritsar may be summoned. It was brought to the notice of the assessee that the summons were issued for 12-10-1989, to the Amritsar party, but the same were received back unserved and was asked dasti summons. The assessee denied to obtain the dasti summons.

(i) The assessee was unable to produce any evidence in respect of the movement of paddy from Kurali to Amritsar.

(ii) Scrutiny of the ledger account of the purchaser in the books of the assessee indicates squaring up of these accounts by means of credit entry in the form of pay orders of the same bank wherein the assessee was having its own bank account.

In the light of the aforesaid discussion I hold that the assessee had introduced its own unaccounted money and I, therefore add the various amounts introduced in the books of accounts by the assessee amounting to Rs. 33,87,550 under section 68/69A of the Income Tax Act, 1961".

3. During the course of assessment proceedings, it was noticed that the assessee had purchased 64,721.66 qtls. and 1244.81 qtl. of paddy parmal and paddy basmati respectively during the period relevant to the assessment year under consideration. The yield of rice and other by-products have been declared by the assessee as under : (Wt. not given. However, sales of phuck extracted from paddy of peral has been shown at Rs. 1,92,058 in the P& EM.) However, the yield of rice and its by-products declared by the assessee is much less than the normal yield which should not be less than 95 per cent of the total paddy milled. The loss on account of dust, and other impurities seldom exceeds 1 per cent. The support price of paddy is fixed keeping in view the fact that it contains 18 per cent of less moisture. The moisture contents in the rice sold is never less than 14 per cent. The other by-products of rice contains moisture alone @ 14 per cent or above as they are normally stored in open and absorb moisture. Thus the overall loss on account of moisture alone cannot be more than 4 per cent.

4. The yield of rice, rice bran, phuck and paddy husk is being adopted @ 17 per cent, 5 per cent, 3 per cent & 28 per cent respectively of 95 per cent of paddy milled. The assessee was required to produce any documentary evidence if he had purchased paddy at less than the support price containing more then 17 per cent moisture. In response to this, the assessee had stated that it had purchased total paddy weighing 54,721 qtls. out of this sold 15,500 qtIs. the remaining paddy comes to 39,245 qtls. (wrongly intimated actual figure comes to 39221) and the rice produce out of the above paddy comes to 25,902 qtls., therefore, there is a yield of 66 per cent of rice, 5 per cent of rice bran and 20 per cent of phuck and remaining part goes as waste. It has further been stated that there cannot be a hard and fast basis in concluding the produce of rice of the paddy because it is affected by certain conditions like weather, atmosphere and even man also. It may be mentioned here that the assessee has stated that register in respect of rice bran and phuck has been pointed vide his letter dated 25-7- 1989, in para 10, the assessee informed that the paddy stock register will be produced as it is with the chartered accountant. However, vide his another letter of even date (i.e., 25-7- 1989) at p. 2 the assessee informed with regard to rice stock and paddy stock register, etc., have perished in the flood last year as the entire building was flooded being in a low lying area. It is worth mentioning here that assessee had closing stock of rice and bardana, which remained safe during the flood and, it was only the stock registers which perished. It is also very strange to note that in the two different letters of the same date the assessee was intimating contradictory factual position. Since the assessee has failed to produce any documentary evidence regarding paddy containing more than 18 per cent moisture was purchased at less then the support price. The difference of yield calculated above and shown by the assessee is being added back to the total income of the assessee, which is worked out as under : Less: 5 per cent on account of dust & dirt moisture and other impurities Its value is taken @ 296/09 per qtls. as the assessee has shown sale of rice to other parties at this rate Its value is taken @ Rs. 213/62 per qtls. i.e. at the rate assessee has shown Phuck The assessee has neither shown its weight nor its value but the same is estimated at 125 per qtl. which comes to Total paddy purchased by the assessee during the year was 1244.89 qtl.

and the total paddy purchased was milled By the assessee in its own sheller.

It is valued at 700 per qtl. as the assessee has neither shown its'weight nor value It is valued @ Rs. 300 per qtl. as the assessee has not shown its value or weight It is valued @ Rs. 125 per qtl. neither its value weight has been shown by the assessee Thus the total addition on account of suppressed yield in respect of rice, rice bran, phuck and husk, etc. comes to Rs. 42,11,332.

Apparently part of this profit was ploughed back in the account books of assessee in the garb of sale proceeds of paddy, as has been discussed in para 2 (p. 5). The addition proposed in para 2 above at Rs. 33,87,550 is therefore, deducted from this amount of Rs. 42,11,331 and only balance amount of Rs. 8,23,781 is added back in the total income of the assessee on this account".

6. The learned first appellate authority, while upholding the addition, held as under : "3.4 I have considered the rival submissions, Prima facie the business of the appellant is shelling of paddy and not selling of paddy (which is apparently the business of a commission agent). Why the appellant chose to sell huge quantities of paddy as such (weighing 16,670 qtls.) is itself a ground for probe and verification and the report of the ADI that the appellant had made sales to the party who had denied such purchases is very vital piece of evidence which the appellant had failed to rebut. The only reason given by the appellant that the paddy sold as such was of inferior quality is not worthy of consumption in its own sheller is without any basis and deserves to be rejected outright. In fact on 20-1-1988 the appellant had sold 650 quintals of basmati paddy and again on 21-1-1988 it had sold 550 qtls. of basmati paddy. On the other hand, it is found from the report of the ADI who probed into the genuineness of the transactions and which report was confronted to the appellant that the socalled, sale were made to a firm which categorically denied having purchased any paddy from the appellant-firm. Its so-called proceeds were received by the appellant by pay orders (not by cheques or drafts) from the said party at Amritsar. It is noted that pay orders were taken from Punjab National Bank, Kurali, i.e., the place of the business of the appellant-firm.

The money was first deposited in cash with the Bank to convert the same into pay orders. It does not stand to reason that the Amritsar party carried 3 lakhs on 2-1-1988, in cash, Rs. 6 lakhs in cash on 6-1-1988, Rs. 2,50,000 in cash on 7-1-1988, Rs. 3,00,000 in cash on 12-1-1988, Rs. 2,00,000 in cash on 13-1-1988, Rs. 3,00,000 in cash on 18-1-1988, Rs. 2,00,000 in cash on 28-1-1988, again Rs. 3,00,000 in cash on 3-2-1988, Rs. 4,00,000 in cash on 15-2-1988, Rs. 3,50,000 in cash on 24-2-1988 and Rs. 1,87,550 in cash on 26-2-1988 from Amritsar-a disturbed town-to Kurali to convert the same into pay orders. During the course of proceedings before me I called upon the Income Tax Officer to visit Punjab National Bank , Kurali and find out who signed for the pay orders. The learned Income Tax Officer contacted Shri V.P.Juneja, Manager, Punjab National Bank , on 12-9-1990 but he was unable to present the original relevant vouchers. Later on on 14-9-1990 he presented the original vouchers and it was found that the application form dated 2-10-1988 filled in vouchers and it was found that the application form dated 2-10-1988 filled in the name of M/s Rama Krishna Rice & Gen. Mills revealed that the pay order was prepared by the Bank at par, i.e., without charging any commission from the purchaser. This is a peculiar circumstance. When called upon to explain, Shri Juneja stated that as per the Bank manager exercised this discretion in favour of the party since he (Shri Juneja) joined this branch in the year 1990. Scrutiny of the original applications further revealed that the applications did not contain the address of M/s Rama Krishna Rice & Gen. Mills, Amritsar. The Bank manager confirmed that the proceeds of pay orders were credited to the same accounts of M/s Ganesh Rice Mills, Kurali, on the same date on which the cash was deposited with the Bank . This report of the learned Income Tax Officer was confronted to the appellant but the appellant had nothing to say and hence it is established that the transactions entered into with the aforesaid Amritsar party were not genuine transactions but were sham arrangements with the melaflde intention of tax evasion.

3.5 The learned Income Tax Officer did make enquiries into the genuineness of the transactions entered into with the aforesaid Amritsar party. Enquiries were made from A.E.T.C., Amritsar, who informed that ST-XXII forms which were produced by the appellant before the learned Income Tax Officer had not been issued to M/s Rama Krishna Rice Mills, Amritsar, Shri Subhash Chander son of Shri Dwarka Nath, partner of the said firm of Amritsar in a categorical statement before the learned D.F.S.C. Amritsar denied having purchased any paddy from the appellant-firm. At the instance of the appellant summons were issued to Shri Subhash Chand but the same could not be served upon Shri Subhash Chand and thereafter onus were upon the appellant to produce Shri Subash Chand which the appellant failed to discharge. It is noted that the results, of all the enquiries conducted by the learned Income Tax Officer were duly confronted to the appellant. After perusing the record, I am convinced that sufficient opportunity was given to the appellant to controvert the case which was ultimately made out against the appellant but the appellant instead of availing of the opportunity, adopted delaying tactics. Accordingly, the contention of the learned counsel that no opportunity was given to rebut the case, is rejected.

3.6 The contention of the learned counsel that goods were dispatched to M/s Rama Krishna Rice & General Mills, Amritsar, through trucks hired at Kurali cannot be accepted, because in the first instance the appellant failed to produce GRs and secondly, it did not produce the President of the Truck Union, Kurali. The fact of the matter is that for wilful attempt to evade tax the appellant resorted to creating false evidence and forgery of documents by procuring bogus sales-tax forms, forging thereon bogus stamps and bogus signatures of the imaginary persons.

3.7 Credits aggregating to Rs. 33,87,550 did appear by way of pay orders drawn of Punjab National Bank , Kurali, in the books of account of the appellant-firm... The onus to prove the genuineness of these deposits did lie upon the appellant. The appellant filed an explanation that the amounts aggregating to Rs. 33,87,550 represented sale proceeds of paddy but this explanation was found, on enquiries, patently false.

"The burden is on the assessee, to establish the source and also to prove that it was not income. From when the receipt of money is admitted by the assessee, as it was, when a credit entry is made in his books, that itself is evidence against the assessee, which unless cogently rebutted, leads to an adverse inference" R. Dalmia v. CIT (1978) 113 ITR 522 (Del). Reference is further invited to the judgment of Calcutta High Court in the case of Shankar Industries v. CIT (1978) 114 ITR 689 (Cal) where it has been held, "it is necessary for the assessee to prove prima facie the transactions which result in a cash-credit in his books of account. Such proof includes: (i) Proof of identity of his creditor, (ii) The capacity of such creditor to advance the money, (iii) The genuineness of the transactions." In the case before me, the firm M/s Rama Krishna Rice & General Mills, Amritsar categorically denied having purchased any paddy from the appellant-firm. Its capacity of paying the amount aggregating to Rs. 33,87,550 is also not established. The genuineness of the transactions is not there because the cash was first deposited in the Punjab National Bank , Kurah, and pay orders were obtained. It does not appeal to common sense that huge sums will be carried in cash from Amritsar to Kurali under disturbed conditions.

3.8 In the light of the above discussions, I hold that the learned Income Tax Officer was justified in treating the credits aggregating to Rs. 33,87,550 as the appellant's income under section 68/69A of the Income Tax Act, 1961. This ground fails and is accordingly dismissed, and the addition of Rs. 33,87,550 is accordingly confirmed".

7. While discussing the facts of the case as also the stand of the revenue and the assessee, the learned first appellant authority has also observed as under: (i) That the assessee requested the Addl. Income Tax Officer to summon Shri Subhash Chand. Accordingly, summons under section 131 were issued but the summons were received back with the remarks "on going time and again, the addressee was not found available"; (ii) That the above fact was brought to the onus was upon the assessee to produce Shri Subhash Chand but the same has not been discharged: (iii) That the Income Tax Officer also-called upon the assessee to produce G.Rs. which were issued by the Truck Operators Union, Kurali; (iv) That in response to summons under section 131, Shri Mohan Singh, Munshi of the truck union, attended but he failed to produce any record or office copies of G.R's vide which the assessee had stated to have transported the paddy; (v) That the assessee was present and did not cross-examine the above named Shri Mohan Singh: (vi) That the assessee was asked to produce the President of the Truck Union, Kurali but he failed to do so, hence the Income Tax Officer concluded that the assessee had shown bogus sales for some "ulterior purpose', mainly to introduce its unaccounted money in the books of account in the garb of these fictitious sales.

10. Coming to the merits, on behalf of the assessee it has been urged that assessee deals in permal-PR 100 per cent Rice and 75 per cent of the production is subject to levy, i.e., purchase by the Government and the rate this year was 273; referring to paper book pp. 49 and 50, it was contended that regular books of accounts have been maintained by the assessee which the assessee claims to be with the department and specific mention is made to paper book p. 11, P&L a/c, trading account, opening stock and it is contended that he purchased parmal paddy and he is maintaining quantitative stock also for this purpose pp. 6 and 7 of the paper book No. 2 have been referred; according to the assessee, point at issue is what p. 68 of the assessee depicts as to whether sale to Rama Krishna Rice & Gen. Mills of 15,500 qtls. of Parmal and Basmati paddy is genuine or not; in support, p. 2, para 3 of the order of learned Commissioner (Appeals) has been referred; yet again referring to pp. 51 to 67 of the assessee's paper book No. 2, it is contended that assessee relies upon ST-XXII forms evidencing purchase/sale of paddy by Rama Krishna Rice & Genl. Mills and these are 17 in number; further that these have been signed and stamped by the purchasers and ST-XXII are issued by the Sales-tax department after signatures.

Referring to again p. 68, paper book No. 2 and paper book pp. 148, 150, 151, 152, 153 and 154, it is contended that assessee cannot be asked to prove the negative since the assessee produced ST-XXII in respect of the sales and once the revenue has issued summons and party was not available, referring to p. 163 of the assessee's paper book, it is contended that the assessee should be deemed to have discharged the onus; it is claimed that the party is in existence, is a genuine one and still remains in business and for the purpose, pp. 169-170 of the paper book along with sections 5 and 36 of Sale of Goods Act has been relied upon. 38 Tax Tribunal Judgment, p. 198 (Mad) and decision of Tribunal has been pressed into service while referring to learned Commissioner (Appeals)'s order, internal page para 4, that is the purchaser-Rama Krishna Rice & Gen. Mills who have ditched the assessee and the State Government since they did not give levy rice to the state; relying upon statement of Bank manager, it is contended that there could be no doubt about pay orders. Paper book p. 69 along with para 4 and pp. 171-174 and order-sheet entries on pp. 184, 186, 188 and 172 to 174 have been relied upon. Also pp. 135, 135, 138, 140 of the paper book the assessee wanted to derive support from these pages to say that the order-sheet entries reflect entries in favour of the assessee and the statements recorded have not been put to the assessee for cross-examination.

11. Alternatively, it is pleaded that the source of credits is assessee's books of accounts, since paddy has been milled and sold and what flows out of the sale, is the profits and in those terms the assessee's stand cannot be disbelievable. Again relying upon pp. 194, 193, 192 of the paper book and decisions reported as CIT v. Bharat Engineering & Construction Co. (1972) 83 ITR 187 (SC). CIT v.Madhavnagar Cotton Mills Ltd. (1976) 104 ITR 493 (Bom) and commentary from learned author Sampath Iynegar-1990 Edn., Vol. III, p. 97, which have been pressed into service to say that onus of proof is on the revenue and not on the assessee and yet further that sale proceeds cannot be added since source is known and that source is books of accounts and business. Concludingly it has been contended that the assessee has discharged the initial burden placed on him. Since the purchaser is in trade, address is known, the party is genuine and is registered with the Sales-tax department. , 12. On behalf of the revenue, the learned senior departmental Representative forcefully contended relying upon paras 2 and 3 of the assessment order that yield shown is rejected and relying upon pp. 199 to 209 of revenue's paper book, it is contended that it was on 6-1-1988 that first draft assessment order was served on the assessee. Revenue 's paper book, pp. 1 to 9. have been pressed into service to emphasise that although the first sales were on 2-11-1987 and 13-11-1987 (as relied by the assessee) the dates of the drafts and the payments are much later. The learned senior departmental Representative referred to ST-XXII forms and copies of the alleged sale bills along with gate passes claimed by the assessee to be evidence for exist of paddy, that not only the amounts are different the very figures and passes differ also. Pages 16 to 137 have been pointedly referred to and further pp.

145 to 147, which have also been relied upon by the assessee in the assessee's paper book, these have been pointedly pointed out by the learned senior departmental Representative to say that these are undated and the relevant dates are claimed to be 16-9-1987 to 14-11-1987. The learned senior departmental Representative has as such contended that the assessee wanted to avoid levy of rice supplied to the Government, hence the above jugglery of entries and he supports it by the fact that it is not known whether the purchaser (alleged by the assessee) is at Amritsar or Ferozepur, since ST-XXII forms are claimed to have been issued by the assessing authority, Ferozepur. Statement of partner of the purchaser has been relied upon along with the decision of the Calcutta High Court CIT v. United Commercial & Industrial Co.

(P) Ltd. (1991) 187 ITR 596 (Cal). It has been yet further contended that no genuineness is attached to the transaction and the assessee has not done anything to discharge the onus of providing the same. The gains to the assessee are 75 per cent of levy rice which the assessee can sell in free market and apart from making huge amounts he has also saved sales-tax liabilities/other levies and income-tax. The learned senior departmental Representative pointedly pointed out that while the purchaser were at Amritsar, the drafts were get made at Kurali and while the first sale is on 2-11-1987 of about Rs. 19 lakhs, first payment was on 6-1-1988 and that was for Rs. 6 lakhs. In the face of these, it is contended that goods were never sold, He has also referred to 144A order for the proposition that everything has been confronted to the assessee. Relying on pp. 192 to 194 of the paper book, the learned senior departmental Representative has contended that earlier assessments were framed under section 143(1) of the Act., hence, no support could be lent to the assessee on those bases. Concludingly, he has contended that it is a pure and simple case of fictitious entries and the orders of the learned lower authorities merit to be upheld on the issue.

15. The assessee has filed the return of income and having appended therewith particulars of income and the copies of accounts, to prove the correctness thereof, the onus lay squarely on the assessee since it is an accepted principle of law and there cannot be two opinions on it that the onus lies on the person who alleges something. The assessee alleges and accordingly wants the revenue to accept the return along with particulars of income and the accounts attached with the return claiming these to be correct ones, hence to prove that the onus is on the assessee.

16. The assessee claims that he has discharged the onus by producing copies of the invoices' sale bills, gate passes and by proving that payment has been received from the purchaser. He is also banking his case on ST-XXII sales-tax forms. That way the assessee claims to have discharged the initial onus cast upon the assessee. At assessee's behest, summons were also issued to various parties including the partner of the purchaser, Motor Union, etc., since the assessee wanted assistance from the revenue to prove its case, that was done. This initial onus cannot be said to have been discharged by the assessee since copies of invoices/sale bills pure and simple do not prove the transaction of sale. Gate passes are assessee's own and self-serving statement. In the face of the statement of the partner of the purchasing firm made before the DFC, who has specifically and categorically denied the transactions and in the face of enquiries made by the revenue department from two State Govt. departments which are directly concerned with the activities as the assessee was in the line of business during the accounting period relevant to the assessment year under appeal, viz., DFC and Sales-tax department, which enquiries were put to the assessee in proceedings under section 144A of the Act; it has to be held that the assessee has neither discharged the onus cast upon it much less even the initial onus. This has to be read in the context of the fact that ST-XXII forms have been found by the Sales-tax department to be not genuine.

The partner of the purchaser has categorically denied the transaction.

The payments are claimed to have been received at Kurali by pay orders made at Kurali on a specific bank who has not charged even the commission from the person purchasing the pay orders and it is not shown how and why. That apart, the purchaser is alleged to be at Amritsar while the payments have been received by making all pay orders at Kurali and it is not reasonable to hold it to be so, particularly in the context of the uncertain political climate prevailing in the State of Punjab, since the year 1982 of which judicial notice can be taken.

It does not stand to reason to hold that the purchaser will carry huge cash of lakhs of rupees to pay the assessee at Kurali right from Amritsar. Yet that apart, the first sale is said to be dated 2-11-1987 and that alleged sale transaction of paddy is said to be of the magnitude of Rs. 19 lakhs whereas the first payment is in the vicinity of Rs. 6 lakhs and it is on 6-1-1988. How and why, when the assessee himself is a miller, he had purchased huge volume of paddy and sold it is anybody's guess. The business of the assessee is milling i.e., a rice sheller and not a dealer in paddy and there is no reason that even assuming it to be so, a sheller/miller of Amritsar will purchase paddy from a Miller/sheller from Kurali, since it is a common knowledge that Tarn Tarn and Amritsar and Rayya Mandi are well known rice belts and paddy growing areas. All the evidence on record which were at the assessment stage and which have since been confronted to the assessee lead to one and only irresistible factual inference and it is that there has been no sales but fictitious entries. The alleged purchaser has denied it. The ST-XXII forms have been found to be issued at Ferozepur whereas the assessee is located at Amritsar. Enquiries made by the revenue from two State Government departments, viz. DFC and the Sales-tax department are adverse to the assessee. About the mode of payment shown by the assessee; these not only cast grave suspicion but cannot also be believed to be so when we consider this in the context of normal human behaviour and the prevailing political climate in the State of Punjab. Be that as it may, on this issue we do uphold the impugned orders of the learned lower authorities, since factual inference of theirs cannot be departed from. This addition as such stands sustained.

17. As a regard the other addition, we will set aside the impugned order and restore the same to the file of the learned first appellate authority for fresh decision with the directions that he will meet the case of the revenue made at the assessment stage. The assessee as also the assessing officer shall be heard.

18. In the result, while ITA No. 1502/Chd/1990, filed by the assessee, fails and stands dismissed, revenue's appeal bearing ITA No.1729/Chd/1990 stands allowed for statistical purposes." Ex-II Extract ftom order of the Tribunal passed in Msc. Application arising out of ITA No. 1502/Chd/1990 for assessment year 1988-89 in case of Ganesh Rice Mills, Kurali, dated 22-6-1993.

"3. Shri P.C. Jain, the learned counsel for the assessee, submitted that all the purchases of the assessee were vouched, that no defects had been found in the maintenance of account books, that the books of account were duly audited and were also inspected by the District Food and Supplies Controller, that sales-tax assessment had been made and the sale figure had not been distributed, that there were certain mistakes in the assessing officer's order which needed to be corrected and that there could be a second addition of Rs. 33,87,550 first because the assessee had shown it as sale of paddy and secondly, because the authorities had come to a finding that no such sale of paddy had taken place and all these entries were fictitious. In a nut shell, it was submitted that whatsoever profit accrued to the assessee on account of sale of paddy had already been recorded in its books of account and at best the department could assess profits with reference to, milling of paddy only.

5. We have carefully considered the rival submissions as also the facts on record. The assessee, in this case, took the plea that it had sold paddy wroth Rs. 33,87,550. The revenue authorities, however, came to the conclusion that no such paddy had been sold by the assessee and that only entries had been passed. The Tribunal also confirmed the aforesaid addition of Rs. 33,87,550. The position now is that as per the books of account, the assessee had shown sale of paddy amounting to Rs. 33,87,550. The department has not accepted such a sale and has proceeded on the basis that such paddy would have been milled by the assessee. An addition of Rs. 33,87,550 has been confirmed by the Tribunal on the ground that the assessee had credited on equivalent amount as sale of paddy, whereas no such sale took place. The question, therefore, arises as to what should happen to the sale of paddy shown by the assessee which has not been taken out for purposes of adjustment of the trading results. It the department pleads as it does, that the said paddy had been milled, then whatever profit accrued to the assessee on the sale of paddy has already been credited to the books of account in the shape of sale of paddy having been assessed at Rs. 33,87,550. We therefore, agree with the learned counsel for the assessee that only the resultant profit on account of milling should be added. Since this matter has not been processed by the lower authorities on these lines and the question of yield has already restored to the file of the first appellate authority, we consider it proper to send this matter back to the first appellate authority with the direction that he should ensure that while working out the total income of the assessee, the addition of Rs. 33,87,550 is not made twice-one by way of sale of paddy as shown by the assessee and second, on account of sale of rice as contended by the department. Either the amount of Rs. 33,87,550 should be taken out from the ultimate addition, if any, on account of trading results or actual profits, if any, with reference to the Milling of paddy should be added in the assessee's hands. However, wish to make it clear that since this is an alternative contention of the assessee, the assessee should not be placed in a position where it should be worse off than it was before raising the alternative contention.

Ex-III Extract from order of the Tribunal in case of Bhasin Rice & General Mills, Kurali ITA No. 1121/Chd/1992 for assessment year 1988-89 and in case of Mahalaxmi Rice Factory, Village, Chhajjumajra ITA No.1130/Chd/1992 for assessment year 1988-89 and Bharat Rice Mills, Santemajra, Kharar ITA No. 1127/Chd/1992 for assessment year 1988-89 and Punjab Rice Mills, ITA No. 1128/Chd/1992 for assessment year 1988-89 and revenue's Appeals in case of Punjab Rice and Mahalaxmi Rice Factory, dated 28-3-1996.

"5. We have heard the Representatives of the parties, perused the record and gone through the order passed in the case of M/s Ganesh Rice Mills (supra), and, keeping in view the entire facts and circumstances of these cases, we set aside the orders under appeal and restore all these cases to the file of the learned first appellate authority to pass fresh orders, after due opportunity, in terms of the directions given by the Tribunal in its under dated 22-6-1993 (supra).

(Assessment order in case of M/s. Bhasin Rice & General Mills and the order of the Commissioner (Appeals) under appeal; have been reproduced in para 6(iii) and 6(vi) respected of this order).

Before analysing the scope of the orders of the Tribunal (reproduced above) we are to observe that the main additions/amounts which were subject-matter appeal before the Tribunal, findings of the Tribunal and directions of the Tribunal in case of M/s Ganesh Rice Mills were as under: under S. 68/69A by considering the credits brought in books by way of pay orders as unexplained or by considering the cash/amount involved in purchase of the said pay orders as assessee's own undisclosed income.

(Investment) As per para 2 of assessment order reproduced by the Tribunal- in paras 5 & 6 at p. 5 of the its order.

On account of sale price of rice and by-products obtained by milling of paddy (which was claimed by the assessee to have been sold, but in fact was never sold) because such sale price was not credited in the books of account.

Para 3 of assessment order as reproduced by the Tribunal in para No. 5 at pp. 5 to 8 of its order dated 28-6-1991.

Amount of Rs. 33,87,550 credited by the assessee by way of pay orders.

in the books of accounts and at serial No. 3 which a claimed to be on account of sale price of paddy which was never sold.It was assessee's case in M.A. that instead of addition at serial No. 2 above it is only the difference of amount sale price of rice and by-products at the Serial No. 2 and amount at serial No. 3 which could at the most, be further added because out of total sale price determined at serial No. 2 the sale price to the extent of Rs. 33,87,550 already stoori credited in books.

Assessee's alternate plea as per para 11 of original order dt.

28-6-1991 and para 3 of order I in M.A. dated 22-6-1993.

Having considered the above facts and relevant observations we are to observe that: (i) The assessing officer after having computed the quantum of addition likely to be made on account of sale price of rice and by-products obtained by milling the paddy (claimed by the assessee to have been sold but, in fact was never sold) at Rs. 42,11,331 himself allowed the set off to the extent of the addition having been made under sections 68/69A of the Act. It was only the balance of Rs. 8,23,781 which was made in the assessment year.

(ii) So far as amount involved at serial No. 3 is concerned the approach of the assessee was correct but, to term the same as profit was not correct because, this amount represented the alleged sale price and not the profit. Consequently, the assessee's pleas before the Tribunal that there was double addition.... first by way of credit by way of pay orders brought by the assessee itself and secondly, by the assessing officer by way of sale price of rice and by-products, itself was misplaced, misleading and against the factual position.

Still further, before coming to the issue involved in these appeals and the rival submissions we are once again of the opinion that it will be useful if we analyse the context and the scope of the orders of the Tribunal in case of M/s Ganesh Rice Mills.... relevant parts of which have already been reproduced in para No. 11 above.

(i) On careful analysis of the findings given by the Hon'ble Tribunal in original order of M/s Ganesh Rice Mills.... in ITA No.1502/Chandi/1990 (assessee's appeal) and ITA No. 1729/Chandi/1990 (Revenue's appeal), both for assessment year 1988-89, dated 28-8-1991 the irresistible conclusion is that: (a) As per para 9 of the Tribunal's order the assessee's request for filing additional evidence was rejected, because the same was found to be vague and ambigious.

(b) From para 15 it is again an irresistible conclusion that the Hon'ble Tribunal had held that the onus, to prove that its return of income, particulars of income and accounts attached therewith are correct and revenue should accept the same to be as it is, was on the assessee.

(c) From para. 16 it is undisputed conclusion that the Hon'ble Tribunal had upheld all the findings given by the assessing officer in para No.2 of assessment year in case of M/s Ganesh Rice Mills and reproduced by the Tribunal in para. 5 of its order dated 20-8-1991 and had in specific terms confirmed the addition of Rs. 33,87,550 made under section 68/69A of the Act.

As a result of aforesaid factual findings the other facts which stand confirmed are as under: (i) The paddy amounting to Rs. 33,87,550, claimed by the assessee to have been sold to parties at Amritsar was never sold to them.

(ii) The amount involved in purchase of pay orders, claimed by the assessee as receipt on account of sale price of paddy paid by the parties at Amritsar, was not contributed by those parties.

(iii) The pay orders were purchased by the assessee with its own undisclosed income.

(iv) The assessee had failed to explain the source of cash/amount involved in purchase of pay orders.

(v) Though it was neither the assessee's case nor the assessee could have proved it. Even if had it been his case and if we, consider the same for the sake of arguments that amount/cash was claimed to have been available form the sale price of rice, etc. than also the assessees having failed to establish that the cash was debited to books of account, and also having failed to establish that there was any sale of rice on such date, the only conclusion is that the assessees were having undisclosed cash with them (outside the books),and had used the same for purchase of pay orders, i.e., invest in pay orders was from such undisclosed funds available with the assessee outside the books of account. Therefore, the same was assessee's undisclosed income under section 68/69A of the Act.

(vi) For the sake of arguments if it is assumed that the cash/amount involved in purchase of pay orders belonged to somebody else then the assessee having failed to explain the source, as well as the modus operandi as to how and on what account such cash was repaid, the addition under deeming provisions of section 68/69A equivalent to the cash/amount involved in purchase of pay orders stood confirmed by the Tribunal.

From para 17 of the order (supra) first the Hon'ble Tribunal had set aside the issue relating to the additions at serial Nos. (ii) & (iii) detailed in para above i.e. the issue relating to other additions including additions of Rs. 42,11,331 having been made on account of sale price of rice and other by-products obtained by milling of paddy.... claimed by the assessee to have been sold as it is, but was never sold.After careful analysis of findings of the Tribunal in paras 9, 15 and 16 it is quite clear that: (i) Those findings were with respect to the assessee's claim of having sold paddy worth Rs. 33,87,550 as it is, having brought the sale price of paddy claimed to have been sold as it is, in books of account by way of pay orders detailed in para 2 of the assessment order in that case and the findings of the assessing officer that the paddy (claimed to have been sold as it is) was never sold, the cash/amount used for purchase of pay orders was not contributed by the parties at Amritsar to whom the paddy was claimed to have been sold, rather the cash/amount was assessee's own funds available outside the books and, if not, then the assessee having failed to explain and prove the source of the amounts used for purchase of the pay orders or credits to that extent recorded in the books, the same was assessee's income under the deeming provisions of section 68/69A of the Act.... if it was cash credit then assessee having failed to explain and prove the source, the same was assessee's income under section 68 of the Act and if it was not cash credit than the assessee having failed to explain and prove the source of the same was to be considered as assessee's undisclosed investment from undisclosed funds available outside the books of account but, brought in books by way of pay orders and therefore was assessee's undisclosed income under section 69A of the Act.

(ii) It is further clear that the Tribunal had confirmed all the findings of the assessing officer which has resulted in addition under section 68/69A of the Act and consequently had confirmed addition of Rs. 33,87,550 having been made under section 68/69A of the Act.

(iii) So far as findings of the Tribunal in para. 17 of the original order are concerned, we are of the opinion those were with respect to the action of the assessing officer for making a trading addition of Rs. 42,11,331 after considering the whole of the price of the rice and by-products obtained by milling the paddy (claimed by the assessee to have been sold but, in fact was not sold).

(iv) Though the assessing officer had made trading addition of Rs. 8,23,781 instead of addition of Rs. 42,11,331 (after allowing the benefit of amount to the extent added under section 68/69A of the Act) but still the Tribunal had set aside the issue relating to this aspect back to the file of the first appellate authority for fresh decision with the directions to meet the case of revenue made at the assessment stage.

Having analysed the original order of the Tribunal as above, we, now revert to the issue raised by the assessee by way of so-called alternate plea recorded in para 11 of the original order of the Tribunal dated 20-8-1991 and by way of miscellaneous application as recorded in the decision of the Hon ble Tribunal dated 22-6-1993 and the Tribunal's directions therein the following facts and findings stand confirmed and finalised: (i) From para No. 3 of Tribunal's order in M/s. Ganesh Rice Mills, miscellaneous application dated 22-6-1993 and para No. 11 of Tribunal original order dated 20-8-1991 (reproduced in para No. 14 above) what we are able to understand is that the assessee had tried to explain the source of credits brought in the books of account by way of pay orders (claimed to have been received from parties at Amritsar against alleged sale of paddy to them) by way of an alternate explanation that since the paddy claimed to have been sold, but had been milled and the rice and by-products obtained as a result of milling of that paddy, the assessee's stand is that the credits were on account of sale proceeds cannot be disbelieved. Posing for a moment I would like to observe here that in view of the findings of the Hon'ble Tribunal in paras 15 & 16 of the original order this so-called alternate plea was absolutely uncalled for and misplaced because the assessee's claim of sale of paddy stood rejected and credited amount also remained (stood) unexplained and consequently stood assessed as undisclosed income under section 68/69A of the Act.

(ii) Further plea of the assessee was that since source of credits available by way of pay orders was known and was the assessee's books of accounts and business the addition could not be made.

Here, I pose for a moment and like to observe once again that in view of the findings of the Hon'ble Tribunal in paras 15 & 16 of the original order this socalled alternate plea was absolutely uncalled for and misplaced because the assessee's claim of sale of paddy stood rejected and credited amount also stood unexplained and consequently stood assessed as undisclosed income under section 68/69A of the Act.

(iii) From para 3 of the Tribunal's order passed in miscellaneous application of M/s Ganesh Rice Mills on 22-6-1993 it is revealed that the assessee's plea that there could not be a second addition of Rs. 33,87,550 first because the assessee has shown it as sale of paddy and secondly, because the authorities had come to a finding that no such sale of paddy have taken place and all these entries are fictitious, goes to show that what he was agitating was the trading addition of Rs. 42,11,331 and credit entries appearing as a result of pay orders and not the source of money involved/used for purchasing the pay orders i.e., the addition under section 68/69A of the Act.

Here again I would like to pose and observe that no authority had considered or observed that the credit of Rs. 33,87,550 was fake credit. The observations were with respect to sale of paddy and the amount received as sale price which had nothing to do with the actual credit and consideration of the same as assessee's income under section 68/69A of the Act, (iv) The gist of submissions made on behalf of the assessee as recorded by the Tribunal in para No. 6 of the order, was that whatever profit had accrued to the assessee on account of sale of paddy had already been recorded in its books of account and at best the department could assess profits with reference to milling of paddy only, confirms beyond doubt that assessee was not referring to the addition having been made under sections 68/69A of the Act.

(v) From the contentions of the assessee (supra) what we have been able to understand and otherwise also is clear, is that by way of alternate plea the assessee had challenged the trading addition of Rs. 42,11,331 which the assessing officer had made by considering the total sale price and by-products obtained from milling of the paddy (which was claimed by the assessee to have been sold but, in fact was never sold) as assessee's undisclosed income because such sale proceeds were not credited in the books of accounts alleging the same to be as double addition First, by way of sale price of paddy already brought (by the assessee itself) in the books of account by way of pay orders and secondly, by the assessing officer by way of adding the whole of the sale price of rice and by-products obtained by milling the paddy (claimed to have been sold by the assessee but, in fact was never sold).

(vi) There is no whisper or iota of objection on the part of the assessee, which may show that the assessee had ever even intended to object the addition made under section 68/69A of the Act as double addition. This analysis finds support from the counsel's own submissions as recorded in para 11 of the original order of the Tribunal.

(vii) From the submissions of the counsel for the assessee that "sale proceeds cannot be added since source is known and that source is books of account and business", as well as his submissions as recorded by the Tribunal in para 3 of its order dated 22-6-1993 in miscellaneous application that "whatever profit accrued to the assessee on account of sale of paddy had already been recorded in its books of accounts and at best the department could assess profit with reference to milling with paddy only" confirms beyond any doubt that he was referring only to the addition likely to be made on account of profit on sale of rice and by-products, (because, the paddy, claimed to have been sold was never sold), and therefore the alternate plea was with respect to the trading addition of Rs. 42,11,331 having been made on account of total sale price of rice and by-products obtained by milling the paddy (paddy claimed to have been sold as it is, but found to have not been sold at all) and not with respect to the cash credit of Rs. 33,87,550 falling within the ambit of section 68/69A or the ownership of asset/money and undisclosed investment falling within the ambit of section under section 69A of the Act, i.e., was not in the context of cash/credit but was in the context of sale price of paddy to be deducted out of sale price of rice and other by-products, brought in books by way of pay orders and in the garb of sale price of paddy.

(viii) Even after having perused the so-called alternate submissions of the counsel recorded by the Tribunal in para 11 of its order dated 20-8-1991 and in para 3 of its order dated 22-6-1993 in case of M/s Ganesh Rice Mills, word by word, sentence by sentence, individually as well as a whole and also the context in which the submissions were made and also the literal meaning of the same, I have not found even an whisper of grievance, which the assessee could have either intended or wished or tried to raise against the addition under section 68/69A of the Act and it was, in our opinion, rightly so, because the addition made under section 68/69A of the Act was under the deeming provisions under which an unexplained cash credit or unexplained investment/assets is liable to be taxed as assessee's income and has nothing to do either with the assessee's claim of sale of paddy as it is, or sale of rice and by-products. This type of addition is quiet independent of business income or any other addition likely to be made in trading account or in business income and had been confirmed by the Tribunal. Coming to the directions given in case of M/s Ganesh Rice Mills, as per para 5 of the Tribunal's order dated 22-6-1993 (already extracted in para No. 14 of this order), I am again of the opinion that the directions were with respect to the amount already credited in the books of account by way of pay orders, (in the garb of sale price of paddy claimed to have been sold but, found to have not been sold) and the trading addition of Rs. 42,11,331 made by the assessing officer by considering the total sale price of rice and by-products obtained on milling of paddy which was claimed to have been sold, but was found to have not been sold, because addition under deeming provisions of section 68/69A cannot be profit or sale proceeds and it is clear from the observations of the Tribunal in para 6 of the order dated 22-6-1993 to the effect that "An addition of Rs. 33,87,550 has been confirmed by the Tribunal on the ground that assessee had credited an equivalent amount of sale of paddy whereas no such sale took place".

These observations go to show that the Hon'ble Tribunal was never referring to the addition having been made under section 68/69A of the Act.

(ix) Another, further observation of the Hon'ble Tribunal in that very para to the effect that "the question therefore arises as to what should happen to the sale of paddy shown by the assessee which has not been taken out for purpose of adjustment of trading results", confirms that Hon'ble Tribunal was referring to addition of Rs. 42,11,331 and the sale price of paddy at Rs. 33,87,553.

(x) The aforesaid view is further confirmed by the observations of the Tribunal in the same para to the effect that "we therefore agree with the learned counsel for the assessee that only the resultant profit on account of milling should be added. " (xi) Furthermore, the specific conclusion/observations of the Tribunal in subsequent part of the same para to the effect that "we consider it proper to send this matter back to the first appellate authority with the direction that he should ensure that while working out the total income of the assessee, the addition of Rs. 33,87,550 is not made twice.... One by way of sale of paddy as shown by the assessee and secondly by way of sale of price as contended by the department", leave no scope for any doubt in the mind of law knowing persons that the Tribunal had never intended to reconsider it's order confirming the addition having been made under section 68/69A nor had any intention to review that decision nor had set aside that addition of Rs. 33,87,550.

There was no occasion or reason for doing so.

(xii) Since the assessee had not appealed against the confirmation of addition made under section 68/69A the same stood confirmed and no subsequent authority could or should have ignored or deleted the same while computing the total income of M/s Ganesh Rice Mills.

In nut sell, the effect of Tribunal's orders in case of M/s Ganesh Rice Mills one dated 20-8-1991 disposing the main appeal of the assessee ITA No. 1502/Chandi/1990 for assessment year 1988-89) and second order dated 22-6-1993 disposing off the assessee's miscellaneous application is that: (i) The claim of M/s Ganesh Rice Mills that it had sold paddy, as it is, worth Rs. 33,87,550 to M/s Rama Krishna Rice & General Mills, of Gumtala, Amritsar during the period 2-11-1987 to 21-1-1998 was found to be false, and no paddy was found to have been sold to this party or to any party.

(ii) That the amount used for purchase of pay orders worth Rs. 33,87,550 during the period 2-1-1988 to 26-2-1998 from Punjab National Bank was not contributed by M/s Rama Krishna Rice & General Mills or anybody else.

(iii) That the assessee having not claimed the amount involved for purchase of aforesaid pay orders as having been contributed by somebody else other than M/s Rama Krishna Rice & General Mills and his claim that it was contributed by M/s Rama Krishna Rice & General Mills having been found to be false, the only resultant source could be assessee's own money available with him outside the books and therefore the fact that money involved was assessee's own undisclosed money stands confirmed.

(iv) Since the assessee failed to explain the source of money involved in purchase of pay orders credited in the books, the investment made in purchase of the same was from assessee's undisclosed income from undisclosed sources.

(v) Even otherwise, the assessee having failed to explain the source and genuineness of credit (if it is taken as credit and not investment) worth Rs. 33,87,550 appearing in assessee's books of accounts the assessing officer's decision to consider the same as unexplained cash credit or as unexplained assessee's investment and consequently bringing the same to tax under section 68/69A of the Act also stood confirmed. Consequently, the addition of Rs. 33,87,550 having been made under section 68/69A stood confirmed.

(vi) As per original order of the Tribunal dated 20-8-1991 the issue relating to the trading addition of Rs. 42,11,331 (actual addition made at Rs. 8,23,781 after allowing set off to the extent of Rs. 33,87,550 against addition made under section 68/69A of the Act) was set aside back to the file of Commissioner (Appeals).

(vii) The directions in order dated 22-6-1993 were in connection with the trading addition of Rs. 42,11,331 as the assessee had submitted that these additions amounted to double addition. In other words, the directions were with respect to the trading additions and not with respect to the addition under section 68/69A of the Act.

In view of our aforesaid conclusion coupled with the fact that M/s Ganesh Rice Mills did not file appeal against the order of the Tribunal confirming addition under section 68/69A of the Act as well as all other observations and findings arrived at by the assessing officer, it is to be taken that addition under section 68/69A stood confirmed by the Tribunal, had become final for all intends and purposes and cannot be reopened or reconsidered in the proceedings before us.

Coming to the cases before us, so far as the facts, which are relevant and useful to decide the issues before us are concerned and have been revealed from the records, have already been reproduced in para Nos. 6 & 7 of this order, however, some other facts are also found to be necessary (are already found to be on the records) which are as under: The total income of Rs. 64,00,000, estimated in exercise of powers available under section 144 of the Act, was arrived at by considering and was inclusive of the following additions: (i) Addition of Rs. 58,69,980 under section 68/69A of the Act on the same reasoning and basis as in the case of M/s Ganesh Rice Mills (p. 7 of the assessment order).

(ii) Addition of Rs. 59,64,694 or Rs. 60,00,000, which the assessing officer was going to make on account of fictitious purchases of rice, bardana and phuck, etc., (p. 8 of the assessment order) subject to set off against the addition under section 68/69A, as was in case of M/s Ganesh Rice Mills.

(iii) Fresh loan of Rs. 27,000 and fresh credit of Rs. 41,000 in the account of Mrs. Rakesh Bala Garg as well as disallowance liable to be made out of unproved expenses (p. 8 of the assessment order). Subject to set off against the addition under section 68/69A, as was in case of M/s Ganesh Rice Mills.

The total income of Rs. 44,00,000, estimated in exercise of powers available under section 144 of the Act was arrived at by considering and was inclusive of the following additions: (i) Addition of Rs. 28,56,571 made under section 68/69A of the Act....

on the same reasoning and basis as in the case of M/s Ganesh Rice Mills (p. 8 of the assessment order) (ii) Addition of Rs. 3,43,754, which the assessing officer was going to make on account of low yield of rice or paddy shown by the assessee to have been milled (p. 9 of the assessment year).

(iii) Addition of Rs. 43,77,245 on account of bogus purchase of rice subject to set off of other additions and considered as yard stick (p.

10 of the assessment order) subject, however to the set off against the addition under section 68/69A, as was in case of M/s Ganesh Rice Mills.

The total income of Rs. 21,00,000 estimated in exercise of powers available under section 144 of the Act was arrived at by considering and was inclusive of the following additions : (i) Addition of Rs. 12,36,885, made under section 68/69A of the Act on the same reasoning and basis as in the case of M/s Ganesh Rice Mills (p. 6 of the assessment order). , (iii) Addition of Rs. 1,14,625 being undisclosed investment in 655 quintals of paddy.

(iv) Addition of Rs. 18,66,940 on account of sale price of rice and other by products as well as low yield (pp. 6 & 7 of the assessment order) subject, however to the set off against the addition under section 68/69A, as was in case of M/s Ganesh Rice Mills.

The total income of Rs. 15,00,000 estimated in exercise of powers available under section 144 of the Act was arrived at by considering and was inclusive of the following additions : (i) Addition of Rs. 12,68,099 directed to be made under section 68/69A of the Act on the same reasoning and basis as in the case of M/s Ganesh Rice Mills (p. 6 of the assessment order).

(ii) Addition of Rs. 14,45,076 being the value of fictitious purchase of rice but, subject to set off against the addition under section 68/69A as was in case of M/s Ganesh Rice Mills.

In the light of above facts and circumstances and our observations in the foregoing part of this order we are further of the opinion that since the directions given by the Tribunal, while disposing of appeals, of all these four respondents before us, are same and similar to the directions having been given in the case of M/s Ganesh Rice Mills the context in which the directions were given and the scope of directions given has to be same and to the same extent as we have analysed and to be and therefore we hold so.

Further, after having held as above, if we analyse the exact context and scope of the directions in the case of four respondents (before us) we have no hesitation to hold that : (i) The addition liable to be made at Rs. 58,69,980 in case of M/s Bhasin Rice & General Mills; addition of Rs. 28,56,571 in case of M/s Punjab Rice Mills; addition of Rs. 12,36,885 in case of M/s Mahalaxmi Rice Factory and addition of Rs. 2,68,099 in case of M/s Bharat Rice Mills made under section 68/69A of the Act stood confirmed by the Tribunal.

(i) That the issue relating to addition of Rs. 59,64,694 in case of M/s Bhasin Rice & General Mills, relating to addition of Rs. 43,77,245 in case of M/s Punjab Rice Mills, relating to Rs. 19,81,565 (Rs. 18,66,940 plus Rs. 1,14,625) in case of M/s Mahalaxmi Rice.Factory and relating to addition of Rs. 14,45,076 in case of M/s Bharat Rice Mills, which were made on account of sale price of rice and low yield, etc. was set aside) was set aside (ii) That the Tribunal had set aside the aforesaid issue with the same directions as were given in case of M/s Ganesh Rice Mills vide order dated 22-6-1993, i.e., the Commissioner (Appeals) was directed to see that the additions set aside should not be double addition because the sale price to the extent of amount brought in the books already stood credited in the garb of sale price of paddy (by way of pay orders); and therefore only difference in total sale price of rice and other by products obtained from milling the paddy (claimed to have been sold as it is but, found to have not been sold) and the amount already credited by way of pay orders only could be added.

In view of above findings, it becomes clear that the revenue's challenge to the action of the Commissioner (Appeals) before us, therefore, is to be seen in the light of above facts which, admittedly, are undisputed and have become final because neither M/s Ganesh Rice Mills nor any of the respondents before us has appealed against the order of the Tribunal on the point of confirmation of addition under section 68/69A of the Act or against the directions given to the Commissioner (Appeals) while setting aside the addition on account of total sale price of rice and other by-products obtained by milling the paddy (which was claimed by the assessee to have been sold, but was never sold).

Coming to the order of the Commissioner (Appeals) in case of M/s Bhasin Rice & General Mills reproduced in para No. 6(vi) above, if we examine the findings of the Commissioner (Appeals) in the light of directions given by the Tribunal as per its order dated 28-3-1996 and to know the scope of the directions given, we have to revert back to the orders of the Tribunal in case of M/s Ganesh Rice Mills to which we do; and after once again going through the same we are of the opinion that so far as computation of the additional addition (in addition to the amount brought in books in the garb of sale price of paddy-quantity-wise) to be made by accepting the fact that paddy was not sold as it is, but, it was milled and rice and by-products obtained were sold, as was pleaded by the counsel for the assessee by way of alternate plea and with respect to which the directions were issued, there seems to be nothing wrong in these orders, except some objections by the learned departmental Representative with respect to quantum of paddy considered by the Commissioner (Appeals) in case of M/s Bharat Rice Mills which we will discuss later on. In other words, the orders of the Commissioner (Appeals) to the extent of additional addition on account of total sale price of rice and byproducts obtained by milling the paddy (it was claimed to have been sold as it is but, was found to have not been sold) after considering the sale price of paddy already brought in books (in the garb of sale price of paddy) or the computation of income from trading activities are concerned the same seems to be in accordance with the directions of the Tribunal and the Commissioner (Appeals) should have stopped at that point, however, it is found that after having computed the quantum of business income as a result of milling of the paddy (claimed by the assessee to have been sold as it is, but in fact not sold), the commissioner of Income Tax stepped further and went on to hold (in case of M/s Bhasin Rice Mills.... at the end of para 3 of his order) that "total income is arrived at was Rs. 3,03,088 and after adding other income like rent and insurance the total income comes to Rs. 3,07,478 which is taken as the total income of the appellant". It is this extra jurisdictional finding of the Commissioner (Appeals) which has been challenged by the revenue before us.

After careful consideration of the totality of facts and circumstances of the cases and our observations findings and conclusion in earlier part of this order, we are of the opinion that the Commissioner (Appeals), while giving aforesaid findings (with respect to total income), exceeded his jurisdiction/scope available as a result of the directions given by the Tribunal. The observations of the Commissioner (Appeals) that total income of the assessee at Rs. 3,03,088, i.e., in case of M/s Bhasin Rice Mills; is not only extra jurisdictional, but is incorrect also, firstly because the Commissioner (Appeals) was never authorised or directed to give such a finding, i.e., the finding as to the total income; and secondly, even if it is assumed that he could give such a finding than also he forgot to take note of the fact that the directions given by the Tribunal had not affected the Tribunal's order confirming the addition having been made by the assessing officer under section 68/69A of the Act which in case of M/s Bhasin Rice Mills was at Rs. 58,69,980. In this way, total income of M/s Bhasin Rice Mills should have been stated by the Commissioner (Appeals) to be Rs. 61,77,458 (Rs. 58,69,980 plus Rs. 3,07,478) and not as Rs. 3,07,478.

Similarly, in case of M/s Punjab Rice Mills the total income should have been recorded at Rs. 31,60,126 (Rs. 28,56,571 having been confirmed under section 68/69A of the Act plus Rs. 3,03,555 determined to be business income by the Commissioner (Appeals)) and not at Rs. 3,03,555.

In case of M/s Mahalaxmi Rice Factory the total income comes to Rs. 15,70,205 (Rs. 12,36,885 having been confirmed under section 68/69A of the Act plus Rs. 3,33,320 determined to be business income by the Commissioner (Appeals)) and not Rs. 3,33,320.

In case of M/s Bharat Rice Mills the total income, so computed, comes to Rs. 15,36,749 (Rs. 12,68,099 having been confirmed under section 68/69A of the Act plus Rs. 2,68,650 determined to be business income by the Commissioner (Appeals)) and not Rs. 2,68,650, however, since the total income as per the assessment order passed under section 144 was Rs. 15,00,000 only and the directions of the Tribunal, while setting aside the issue relating to the trading addition, being that in fresh proceedings the assessee should not be placed in a position where it should be worse off then it was before raising the alternate contention, the total income has to be restricted to Rs. 15,00,000 and that too subject to fresh computation of business income or additional business income likely to be added by the Commissioner (Appeals), i.e., the addition likely to be made by meeting the revenue's objection that the quantum of paddy considered by the Commissioner (Appeals) should have been 22,528 quintals (as per p. 8 of the assessment order) as against Rs. 14050.25 quintals taken by him. Since we are restoring the issue with respect to computation of additional addition, i.e., the issue relating to additional addition determined by him at Rs. 2,68,650 is being set aside and restored back to his file with the directions that the same may be recomputed after allowing the parties an opportunity of being heard and in case the total income, after considering the addition made under section 68/69A amounted to Rs. 12,68,099 and other additions/business income computed by the Commissioner (Appeals) comes to more than Rs. 15,00,000 then the excess will be ignored and the total income will be restricted to Rs. 15,00,000.

In view of above discussion the orders of the Commissioner (Appeals) in case of M/s Bhasin Rice & General Mills, M/s Punjab Rice Mills and M/s Mahalaxmi Rice Factory are modified to the extent that the findings with respect to and relating to the determination of total income in case of M/s Bhasin Rice & General Mills at Rs. 3,07,478, in case of M/s Punjab Rice Mills at Rs. 3,03,555, in case of M/s Mahalaxmi Rice Factory at Rs. 33,33,320 and in case of M/s Bharat Rice Mills at Rs. 2,68,650 are expunged/deleted/replaced by the findings that the total income in case of M/s Bhasin Rice & General Mills is determined at Rs. 61,77,458, the total income in case of M/s Punjab Rice Mills is determined at Rs. 31,60,126, the total income in case of M/s Mahalaxmi Rice Factory is determined at Rs. 15,70,205, whereas, the total income of M/s. Bharat Rice Mills will be subject to our directions to the Commissioner (Appeals) but, shall not be more than Rs. 15,00,000 in any case.

Before ending with the matter we consider it in the interest of justice to give our findings with respect to the other submissions of the counsel for the assessee hereunder: One of the submissions was that in case of M/s Ganesh Rice Mills the order of the Commissioner (Appeals) passed after the directions of the Tribunal as per its order dated 27-6-1993 wherein the total income was computed at Rs. 5,93,538 after holding that "it is also an admitted fact by the assessing officer that addition of Rs. 33,87,550 made on account of unexplained cash credit represented only ploughed back profit on rice, at Rs. 4,06,703 having been accepted by the revenue, the finding that amount of cash credits was out of sale proceeds of rice has to be accepted in these cases also.

After hearing both the parties, we are unable to subscribe to the view expressed by the counsel to the findings in Commissioner (Appeals) in that order because the Tribunal having specifically confirmed the addition of Rs: 33,87,550 and also the reasons for making such additions, it was not open either for the assessing officer or for the Commissioner (Appeals) to reconsider the same and come to the findings that cash credit represented the ploughed back profit on the sale of rice. However, if the assessing officer had admitted such a fact, the Commissioner (Appeals), at-least should not have accepted the same and should have applied his mind to the facts of the case. Any how, so far as present cases are concerned, neither there is such admission on the part of assessing officer nor the Commissioner (Appeals) have discussed this issue and that is why the revenue is in appeal. Further, so far as the observations of the Commissioner (Appeals) in the order of M/s Ganesh Rice & General Mills that "it appears inconceivable that on the total turn over about Rs. 1,12,00,000 appellant would earn as high profit as Rs. 42,00,000 or Rs. 37,00,000" are concerned, we, without commenting on the intelligence of the Commissioner (Appeals) and the theory invented by him for making such observations, can only say that the observations were not only irrelevant but were misplaced also, because, profit of the business is something else and total taxable income is something else. It is in many cases that the total taxable income may come even more than the total turnover, what to say to earn profit (equal to one third of the turnover). For example, if the additions are under the deeming provisions of section 43B or under section 40(A)(3) or under section 68/69/69A/69B/69C of the Act etc,, then the margin of profit or the total profit earned cannot be considered as basis so as to considered the justification of income arrived at as. a result of apphcation of deeming provisions and it is so, because additions made under these deeming provisions of the Act have nothing to do with the margin of profit or business profit or turnover. There may be case where, the turnover may even be nil but, due to the addition under deeming provisions (supra) the total income may be determined at crores. Anyhow, we are unable to accept the reasoning of the Commissioner (Appeals) given in case of the M/s Ganesh Rice & General Mills for not taking the confirmed. addition of Rs. 33,87,550, having made under section 68/69A of the Act, in to consideration while computing the total income. We, at least, cannot subscribed to such an view and therefore that order of the Commissioner (Appeals) is of no use to the respondent assessees.

Another plea of the learned counsel, which was made just by relying on the order of the Commissioner (Appeals) (supra) and raised for the first time, was that the cash credits i.e., the amounts brought in books by the assessee by way of pay orders (in the garb of sale price of paddy-which was never sold) may be considered as out of sale price of rice and other by products obtained from the milling of the paddy (claimed to have been sold as it is but in fact not sold), we are the opinion that first of all such a plea is not admissible at this stage and secondly, even if allowed to be raised than also the same can stand to the test only if the assessee could establish with the help of cogent material/books of account that the pay orders were purchased out of sale price of rice otherwise not. In the present cases, we are of the opinion that all the assessees having failed even to produced the books of account, cannot support the plea that the pay orders were purchased with the money available out of sale proceeds of rice etc.

Anyhow, the findings that all these assessees had failed to explain the source of money brought in books by way of pay orders having become final this plea is not even worth consideration.

Yet another plea advanced by the counsel for the assessees was that if at all the addition under section 68/69A of the Act, is to be sustained, the same may be to the extent of only the peak amount of the pay orders. Here again, we are of the opinion that such a plea can be considered only when, the person making the plea can establish that amount brought in books by way of first pay order was taken out and was used for purchase of second pay order and, so on and so forth, otherwise, it is not even worth consideration what to say of acceptance. In the present cases, the assessees having failed to establish this fact, the plea fails.

Another plea taken by the counsel for the assessee that the total income determined by the Commissioner (Appeals) in consequence upon the directions of the Tribunal was based on remand report submitted by the assessing officer and therefore, there is no question of any mistake having been committed by the Commissioner (Appeals). According to him it were the assessing officer who had determined the total income as has been finally, taken by the Commissioner (Appeals).

Having heard the parties and in the facts and circumstances of the case, we are of the opinion that the assessee having failed to produce any evidence that the assessing officer were called for to determine the total income. In remand report the assessing officer's jurisdiction is restricted to the issue involved in remand report and it seems that the Commissioner (Appeals) had called for remand report only with respect to the business income to be computed in view of the fact that the paddy, which was claimed to have been sold as it is, but was not sold, was milled. The Commissioner (Appeals) also has nowhere said that remand report was with respect to the total income or with respect to addition under section 68/69A of Act, (already confirmed by the Tribunal). In view of these facts and circumstances, the plea is rejected.

Coming to the decision of Hon'ble Tribunal Chandigarh Bench 'B' (Third Member) in case of Bansal Rice Mills, Amloh & Anr. v. ITO & Anr. dated 30-3-2001 in ITA No. 1657/Chd/1990 & ITA No. 1727/Chd/1990 (reported at (2001) 72 TTJ (Chd)(TM) 1-Ed.), on which the counsel for the respondents had heavily relied, we, first of all would like to state that so far as the law relating to the necessity for following the precedents, binding nature of the precedents and the judicial propriety are concerned, we are vigilant and conscious about the same. We are also conscious of the proposition that a Bench of the Tribunal should/must follow the decision of another Bench of the Tribunal/decision of Tribunal (Third Member)/decision of Tribunal Special Bench/decision of Jurisdictional High Court and the Hon'ble Supreme Court, unless and until one is able to distinguish the same on facts or on the law point involved but at the same time we are also conscious of the fact that precedents may be followed with utmost care and not with blind eyes or blocked mind.

We have considered the decision of the Hon'ble Tribunal, Chandigarh Bench 'B' (Third Member) in case of Bansal Rice Mills (supra) with utmost care and are, with all respects at our command, of the opinion that decision is not applicable to the issue involved in the present four appeals of the revenue, In case of Bansal Rice Mills the Hon'ble Bench was seized of the matter in original appeal against the order of the Commissioner (Appeals) and therefore, had jurisdiction to adjudicate upon all the issues/grounds of appeal/objections raised before it whereas, it is not the case in present appeals before us. In appeal before us, we are only seized of the matter with respect to the compliance by the Commissioner (Appeals) to the directions given by the Tribunal, i.e., our jurisdiction is only to deal with the issue relating to the scope of directions given by the Tribunal and compliance of the same by the Commissioner (Appeals). Further, in case of Bansal Rice Mills the issue relating to case credit brought in books in the garb of sale price of paddy (claimed to have been sold as it is, but, not sold) was open for adjudication by the Tribunal whereas, in the cases before us that issue already stands concluded by the Tribunal against the assessees. Yet another distinguishable fact is that in case of Bansal Rice Mills regular books of account were available for verification of assessee's stand that sale price of rice had been ploughed back in the books by way of sale price of paddy but this is not the case in the present cases, where the assessment had to be completed under section 144 of the Act and this action as well as the findings that the assessees had deliberately withheld the production of the books of account to avoid detection of concealed income have been confirmed by the Tribunal and have become final.

In view of the above facts and circumstances and discussion we, with all respect to the Hon'ble Tribunal, are of the opinion that decision in case of Bansal Rice Mills (supra) is not applicable to the issue involved in present appeals.

In the result, our answer to questions framed in para No. 5 of this order is "No" and the revenue's appeals in case of M/s Bhasin Rice & General Mills, M/s Punjab Rice Mills & M/s Mahalaxmi Rice Factory are allowed whereas, its appeal in case of M/s Bharat Rice Mills is allowed subject to our directions to the Commissioner (Appeals) with respect to the issue remanded back to him.

I have gone through the proposed order of my learned brother Shri I.S.Verma, JM but with great respect to him, I have not been able to persuade myself to agree with the findings and conclusions drawn by him. I, therefore, proceed to write my dissenting order as follows: My learned brother has already discussed in detail the facts in the case of M/s Bhasin Rice & General Mills, Kurali by extensively quoting from the assessment order, Commissioner (Appeals)'s order and the orders of the Tribunal, Chandigarh Bench in this case and in the case of M/s Ganesh Rice Mills. The outcome of the present appeals mainly rests on facts, I, therefore, consider it appropriate to briefly discuss herein the factual position and the background leading to present appeals.

In this case, the assessing officer completed the assessment on a total income of Rs. 64 lacs by observing as under: (i) The assessee had shown total purchases of paddy weighing 46058 qtls. in the books of accounts. The cost of the same, as worked out by the assessing officer on p. 8 of the assessment order, was Rs. 72,90,000. In addition, the assessee had also shown purchases of rice, bardana, phuk etc., worth Rs. 59,64,694. Out of the paddy purchased, the assessee claimed to have sold paddy weighing 32611 qtls. as such.

The cost of paddy sold as mentioned in the assessment order were to the tune of Rs. 58,69,980. The case of the assessing officer was that the assessee had not sold paddy as such. Rather, the assessee had milled the paddy and sold rice and other by-products like rice bran, phuk and husk in the open market. The assessing officer further mentioned that sale proceeds of paddy were introduced by the assessee in its books of accounts but actually the same represented unexplained investment/credits. Therefore, according to the assessing officer, the addition to the extent of Rs. 58,69,980 was liable to be made on this account itself.

(ii) The assessee had suppressed the yield of rice, rice bran, phuk and husk and, therefore, addition was liable to be made on this account as well. The assessing officer estimated suppressed income on this account at Rs. 3,50,000.

(iii) The assessee had shown bogus purchases of rice, bardana and by-products of rice to the tune of Rs. 59,64,694. According to him, these were fictitious purchases debited in the trading account made to cover up the by-products obtained out of the paddy milled but shown as paddy sold. Therefore, the same was also liable to be taken into account.

(iv) There were two fresh loans of Rs. 27,000 and Rs. 41,000 in the names of two parties. Further, the assessee had also debited huge expenses to the P&L a/c and the genuineness whereof was not verifiable in the absence of books of accounts.

(v) In the balance sheet the assessee had shown advance of Rs. 18,63,820 received from M/s Pawan Kumar Neeraj Kumar for sale of rice on consignment basis. However, the assessee had not reflected the closing stock of paddy sent for sale on consignment basis.

The assessee impugned the above additions in appeal before the Commissioner (Appeals) who upheld the action of the assessing officer in determining the total income at Rs. 64 lacs by observing as under: (i) The assessee had credited an amount of Rs. 61,47,782 for sale of paddy to two parties worth Rs. 32,83,962 and Rs. 18,63,820. But the assessee has not been able to prove the genuineness of these alleged sales of paddy. Therefore, the addition of Rs. 51,47,782 being credits on account of sales of paddy was liable to be confirmed. For this purpose, the Commissioner (Appeals) relied on the order of the Tribunal, Chandigarh Bench dated 20-8-1991 in the case of M/s Ganesh Rice Mills in ITA No. 1502/Chd/1990 for the assessment year 1988-89.

However, it may be mentioned that this order was subsequently recalled and vide order dated 22-6-1993. Tribunal, Chandigarh Bench set aside the order of the Commissioner (Appeals) and restored the issue to the Commissioner (Appeals) for fresh adjudication. The detailed facts are discussed in subsequent paragraphs.

(ii) In fact, the assessee had actually milled the paddy and obtained by products such as rice, rice bran, phuk and paddy husk. However, by showing sales of paddy, the assessee had evaded purchase tax, levy rice and other Govt. levies. This must have resulted in extra benefit of Rs. 10 lakhs i.e., at 20 per cent of the purchase price of paddy.

(iii) Estimated profit of Rs. 3 lakhs to Rs. 4 lakhs on sale of rice and by-products earned on milling of paddy, which was shown in the books as sale of paddy.

(iv) As regards observation made by the assessing officer that assessee had not reflected the advance of Rs. 18,63,820 received from the party for sale of rice on consignment basis in the closing stock, the Commissioner (Appeals) observed that the advance received was not for sale of rice but for sale of paddy. This amount was already included in the addition of Rs. 51,47,782 and, therefore, no addition was called for on this account.

In this case, the assessee had shown total purchases of paddy weighing 39263 qtls. Out of the same, the assessee had shown sales of paddy as such weighing 15365 qt1s. worth Rs. 28,56,571. These sales of paddy were not considered to be genuine by the assessing officer. The assessing officer observed that paddy shown as sold in the trading account was in fact milled and rice and other by-products so obtained were sold outside the books of accounts and sum of Rs. 28,56,571 represented undisclosed income introduced in the books of accounts. The assessing officer, therefore, determined the income at Rs. 44 lakhs by taking into account the following facts: (i) Unexplained credits of Rs. 28,56,571 shown in the books on account of alleged sale of paddy.

(ii) In the books, the assessee had shown milling of paddy weighing 23,809 qtls. However, the yield of rice and its by-products was understated. The assessing officer made an addition of Rs. 3,43,754 on account of low yield.(iii) In the books, the assessee had shown purchase of rice weighing 16,759 qtls. which is abnormal feature in the case of a rice sheller.

This, according to the assessing officer, was a bogus purchase shown in the books with a view to cover the yield of rice and other by-products realised on milling of paddy, which was shown as alleged sales of paddy. There was a difference of 9,899 qtls. in the rice shown as supplied to the District Food & Supplies department and as shown in the chart furnished along with the return of income. The value whereof comes to Rs. 28,31,430. This was also liable to be taken into account for estimating total income, (iv) The assessee had shown heavy expenses in the trading account and P&L a/c correctness whereof could not be verified for want of books.

(v) The assessee had shown investment of Rs. 1,30,709 in the construction of new building but correctness whereof could not be verified for want of books.

Taking into account all these facts, the assessing officer estimated the total income at Rs. 44 lakhs.

On appeal, the Commissioner (Appeals) reduced the total income from Rs. 44 lakhs to Rs. 33 lakhs by observing as under: Here also, the Commissioner (Appeals) relied on the order of Tribunal, Chandigarh Bench dated 20-8-1991 in the case of M/s Ganesh Rice Mills in ITA No. 1502/Chd/1990 for the assessment year 1988-89.

(ii) Extra benefit of Rs. 2 lakhs obtained by way of evasion of purchase tax, levy rice and other Govt. levies by showing sale of paddy which in fact was milled.

(iii) Extra profit earned of Rs. 2.5 lakhs on milling of paddy, which was shown as sale of paddy.

However, the Commissioner (Appeals) did not accept further addition of Rs. 11 lacs on account of suppression of yield, unverifiable nature of expenses and investment in the house property for the reason that those were covered by other additions.

III. M/s Bharat Rice Mills, Santimajra (Kharar) ITA No.1204/Chandi/1996 : In this case, the assessee had shown total purchases of paddy weighing 16248 qtls. Out of the same, the assessee claimed to have sold 6200 qtls. of paddy for Rs. 12,68,099. The assessing officer obtained information from the District Food & Supplies department that the assessee had actually milled paddy weighing 16248 qtls. The assessing officer determined the total income at Rs. 15 lakhs by taking into account the following facts: - (i) Unexplained credits of Rs. 12,68,099 shown in the form of bogus sales of paddy.

(ii) In the books, the assessee had shown yield of 5105 qtls. of rice out of the paddy milled weighing 7770 qtls. But as per letter of District Food Controller, the assessee had actually milled 16248 qtls.

of paddy and produced 10480 qtls. of rice. Thus, there was a difference in the production of rice weighing 5274 qtls. worth Rs. 14,45,076.

(iii) The assessee had shown purchases of rice weighing 2602 qtls.

which was rather an abnormal feature in the case of a rice sheller.

This was done with a view to inflate the purchases.

Taking into account these facts, the assessing officer assessed the total income at Rs. 15 lacs.

On appeal, the Commissioner (Appeals) upheld the entire addition by observing as under; (ii) Extra benefit obtained of Rs. 30,000 by way of evading purchase tax, levy rice and other Govt. levies.

(iii) Extra profit earned of Rs. 1 lakh to Rs. 1.5 lakhs on milling of paddy shown as paddy sold.In this case, the assessee had shown purchases of paddy in the books weighing 43321 qtls. of paddy. Out of the same, the assessee claimed to have sold paddy weighing 7085 quintals for Rs. 12,36,885. Like other cases mentioned above, the assessing officer treated credits of Rs. 12,36,885 being sale proceeds of paddy as unexplained. The assessing officer completed the assessment on a total income of Rs. 21 lakhs by observing as under: (i) Rs. 12,36,885 being unexplained credits representing alleged sale of paddy weighing 7085 qtls.

(ii) The assessee had shown purchases of rice worth Rs. 2,23,224, which was an abnormal feature in the case of a rice sheller. According to the assessing officer, such purchases were shown with a view to reduce the profit earned. Thus, addition of Rs. 2,23,224 was called for on this account.

(iii) In the books, the assessee had shown purchases of paddy weighing 43321 qtls. However, as per the information received from the District Food & Supplies Controller, the assessee had reported purchases of paddy weighing 43976 qtls. Thus, the balance purchases of 655 qtls.

worth Rs. 1, 14,625 were unexplained and, therefore, addition on this count was also-called for.

(iv) The assessee had shown total purchases of paddy at 43976 qtls.

This quantity was actually milled by the assessee. The yield shown in the books was less than the yield fixed by the Punjab Agricultural University., Therefore, by taking the higher rate of yield, the assessing officer worked out the suppressed income on account of low yield at Rs. 18,66,940. This, according to the assessing officer, was liable to be added.

(v) Besides, the assessee had claimed huge expenses in the trading and P&L a/c. In the absence of books of accounts the correctness thereof could not be verified.

Thus, taking into account all the above mentioned facts, the assessing officer determined the total income at Rs. 21 lakhs.

On appeal, the Commissioner (Appeals) reduced the addition to Rs. 15,50,000 by observing as under: (ii) Extra benefit earned of Rs. 40,000 by the assessee by showing sale of paddy by way of evasion of purchase tax, levy rice and other Government levies.

(iii) Extra profit of Rs. 3 lakhs earned from milling of paddy weighing 7085 qtls. shown in the books as sale of paddy.

Being aggrieved, all the four assessees impugned the additions in appeals before Tribunal, Chandigarh Bench. Revenue also filed cross-appeals in two cases of M/s Punjab Rice Mills and M/s Mahalaxmi Rice Mills, Tribunal, Chandigarh Bench vide its consolidated order dated 28-3-1996 in ITA Nos. 1127, 1128, 1129, 1220, 1221 & 1130/Chd/1992 for the assessment year 1988-89 set aside the orders of the Commissioner (Appeals) and restored all the appeals to the file of the learned first appellate authority for fresh adjudication keeping in view the directions given by the Tribunal in the second order dated 22-6-1993 in the case of M/s Ganesh Rice Mills in ITA No. 1502/Chd/1990 for the assessment year 1988-89. The relevant findings of the Tribunal, as recorded in para 5 of its aforesaid consolidated order dated 28-3-1996, are reproduced as under: "5. We have heard the representatives of the parties, perused the record and gone through the order passed in the case of M/s Ganesh Rice Mills (supra) and, keeping in view the entire facts and circumstances of these cases, we set aside the orders.under appeal and restore all these cases to the file of the learned first appellate authority to pass fresh orders, after due opportunity, in terms of the directions given by the Tribunal in its order dated 22-6-1993 (supra). As regards other points, we express no opinion & learned Commissioner (Appeals) is directed to consider those afresh." Thus, all the appeals stood restored to the file of the learned first appellate authority and appeals of both the assessee and the revenue were treated as allowed for statistical purposes.

In pursuance of the directions given by the Tribunal, the Commissioner (Appeals) took up the appeals for fresh adjudication. The Commissioner (Appeals) referred to the two orders of Tribunal, Chandigarh Bench i.e., order dated 28-8-1991 in the case of M/s Ganesh Rice Mills, Kurali for the assessment year 1988-89 and subsequent order dated 22-6-1993 passed by the Tribunal after recalling its first order. He observed that the directions of the Tribunal in the second order were that while working out the total income of the assessee, the addition should not be made twice i.e., firstly by sale of paddy as shown by the assessee in the books and secondly on account of sale of rice and by-products as contended by the revenue. During the course of hearing of appeals, the Commissioner (Appeals) called upon the assessees to furnish working of income as per directions given by the Tribunal. The details and computation of income furnished by the assessees were also given to the assessing officer for his counter- comments. Thereafter, the Commissioner (Appeals) himself examined the computation of income as submitted by the assessing officer and found certain discrepancies therein and the Commissioner (Appeals) himself computed the total income in all the cases as under : The Commissioner (Appeals) considered the entire quantity of paddy purchased as milled and by taking the yield of rice, rice bran, phuk and husk at 66 per cent, 5 per cent, 3 per cent and 21 per cent respectively, as taken in the case of M/s Ganesh Rice Mills, worked out the total sale proceeds of these items at Rs. 75,33,791. While doing so, the Commissioner (Appeals) also took into account the opening and closing stock of these items as shown in the books. Thereafter, the Commissioner (Appeals) reduced the cost of paddy as worked out by the assessing officer and expenses debited in the trading and P&L a/c. In addition, the assessee also claimed additional expenses incurred on milling of paddy, which was shown as sales of paddy @ Rs. 4 per bag of 65 kg. and after allowing depreciation and deduction under section 80HHA and by including other income from rent and insurance at Rs..7,090, the Commissioner (Appeals) computed the total income at Rs. 3,07,480.

As regards extra gain of Rs. 10 lakhs sustained by the Commissioner (Appeals) in the first order, the Commissioner (Appeals) observed that as per letter received from the DFSC, there was no shortage in the levy rice supplied by the assessee. Therefore, no addition was called for.

In regard to loans of Rs. 41,000 and Rs. 27,000 from two persons, the Commissioner (Appeals) observed that both the parties were being assessed to tax. Therefore, the assessing officer was directed to verify the genuineness of the same and if the same were found to be correct, no action would be called for.

The Commissioner (Appeals) computed the income in the same manner, as mentioned above in the case of M/s Bhasin Rice & General Mills, Kurali, and worked out the total taxable income at Rs. 3,03,555. The Commissioner (Appeals) arrived at the sale proceeds of paddy and its by-products at Rs. 29,72,901. Thereafter, the Commissioner (Appeals) reduced the amount of Rs.. 28,19,346 being sale proceeds of paddy credited in the books of accounts to find out the correct profit from milling of paddy. In addition, an amount of Rs. 1,50,000 was added on account of unexplained investment in paddy.

As regards observations made by the assessing officer about loans taken from two persons, the Commissioner (Appeals) observed that both the parties were being assessed to tax. Accordingly, the assessing officer was directed to verify the genuineness and if the same were found to be genuine, no addition should be made.

As regards observations made by the assessing officer that assessee had made investment of Rs. 1,30,709 in the construction of the building, the Commissioner (Appeals) observed that in the assessment year under reference, the assessee had not made any addition to the same.

Therefore, no addition was called for.. The Commissioner (Appeals) also observed that since there was no short supply of levy rice, no addition on account of evasion of purchase tax etc., as mentioned in the first order of the Commissioner (Appeals), was called for.

The Commissioner (Appeals) computed the receipts from milling of entire paddy purchased at Rs. 14,53,831. Thereafter, the Commissioner (Appeals) reduced the sale proceeds of paddy amounting to Rs. 12,35,182 and arrived at the income of Rs. 2,18,649. In addition, the Commissioner (Appeals) added an amount of Rs. 50,000 being unexplained investment in the purchase of paddy and in this manner, the Commissioner (Appeals) arrived at the total income of Rs. 2,68,650. The Commissioner (Appeals) observed that the assessee did not obtain any extra benefit by evading purchase tax, levy rice etc. because the DFSC had reported that there was no short supply of levy rice supplied by the assessee.

In this case also, the Commissioner (Appeals) considered the total paddy purchased as milled and by following the same method as detailed in the earlier three cases and worked out the sale proceeds of rice and by-products at Rs. 15,11,457. After deducting sale proceeds of paddy amounting to Rs. 12,36,885, the Commissioner (Appeals) determined the total taxable income of the assessee at Rs. 3,33,320. The Commissioner (Appeals) also observed that as per information received from DFSC, there was no short supply of levy rice by the assessee. Thus, no addition of Rs. 40,000 as sustained by the Commissioner (Appeals) at the time of deciding the first appeal, was called for.

Against the aforesaid orders of the Commissioner (Appeals), the revenue has come in appeals before us in all the above-mentioned cases, where identical grounds have been taken. The main ground taken by the revenue is as under: "On the facts and in the circumstances of the case, learned Commissioner (Appeals) has erred in working out taxable profit at Rs. 3,07,480" (the amount of taxable profit varies in each case).

My learned brother has already dealt with at length the submissions of both the parties in the order. Therefore, the same are not repeated here. However, in my opinion, the following issues need to be decided by the Bench: (i) Whether, orders passed by the Commissioner (Appeals) are in conformity with the directions given by the Tribunal in its consolidated order dated 28-3-1996 in ITA Nos. 1127, 1128, 1129, 1220, 1221 & 1130/Chandi/1992 for the assessment year 1988-89 setting aside the orders of the Commissioner (Appeals) and restoring all the appeals to the file of the learned first appellate authority for fresh adjudication keeping in view the Tribunal's second orders dated 22-6-1993 in the case of M/s Ganesh Rice Mills in ITA No. 1502/Chd/1990 for the assessment year 1988-89? (ii) Whether, on the facts and in the circumstances of the cases and keeping in view the directions given by the Tribunal in its consolidated order dated 28-3-1996 in these cases, the Commissioner (Appeals) was justified in not including the additions made by the assessing officer under section 68/69A in the total income? (iii) Whether, on the facts and in the circumstances of the cases and keeping in view the directions given by the Tribunal in the aforesaid order, the Commissioner (Appeals) was justified in computing the total income at the figures mentioned above? From the facts, discussed above, it is obvious that the Commissioner (Appeals) has referred to the directions given in the order of Tribunal, Chandigarh Bench in the case of M/s Ganesh Rice Mills (supra). Even in the consolidated order dated 28-3-1996 passed by Tribunal, Chandigarh Bench in these cases, the Tribunal had directed the Commissioner (Appeals) to pass fresh orders in terms of directions given in the order dated 22-6-1993 in the case of M/s Ganesh Rice Mills, It would, therefore, be in the fitness of things to discuss herein the facts and findings of the Tribunal recorded in the case of M/s Ganesh Rice Mills.

In the case of M/s Ganesh Rice Mills, the assessee had shown total purchases of paddy weighing 54721.26 qtls. Out of the same, the assessee claimed to have sold paddy weighing 15500 qtls. without milling, An amount of Rs. 33,87,550 was credited in the books being sale proceeds of paddy. Such sales were found to be bogus for which results of detailed enquiries made by the assessing officer have been elaborately discussed in the assessment order. The assessing officer observed that assessee had in fact milled the paddy and obtained rice and other by-products. These had been sold in the open market. Thus, the assessing officer rejected the claim of the assessee for sale of paddy and held that the assessee had in fact milled the paddy and rice and other by-products obtained were sold in the open market. The assessing officer, therefore, held that credits on account of sale proceeds were liable to be added under section 68/69A.However, the assessing officer considered the entire quantity of paddy purchased as milled and by applying percentages of yield at 70 per cent, 5 per cent, 3 per cent and 22 per cent of rice, rice bran, phak and paddy husk respectively, the assessing officer worked out the total difference between the yield shown in the books and the yield estimated including the paddy shown as sold at Rs. 42,11,331. He further observed that part of this profit was ploughed back in the account books of the assessee in the garb of sale proceeds of paddy. Therefore, addition of Rs. 33,87,550 made under section 68/69A required to be adjusted against the addition of Rs. 42,11,331 and only balance amount of Rs. 8,23,781 was liable to be added. In this manner, the assessing officer made an addition of Rs. 42,11,331 (33,87,550 + 8,23,781).

Aggrieved; the assessee took the matter in appeal before the Commissioner (Appeals), who upheld the addition of Rs. 33,87,550 made under section 68/69A. As regards the addition of Rs. 8,23,781, the Commissioner (Appeals) held that no separate addition was called for in view of the fact that the same was covered by addition of Rs. 33,87,550. By relying on the judgments mentioned at p. 8 of the appellate order, the Commissioner (Appeals) also held that the assessee was entitled to benefit of telescoping the addition. Both the revenue and the assessee aggrieved with the order of the Commissioner (Appeals) filed cross-appeals before the Tribunal. The main thrust of assessee's arguments before the Tribunal was that assessee had in fact sold the paddy as it is and the stand of the department, on the other hand, was that it had actually milled the paddy and obtained rice and other by-products, which were sold in the open market, was not correct. It was also contended that such purchases and sales were duly mentioned in the ST forms submitted by the purchasers. Thus, it was contended that authorities below were not justified in making/sustaining the addition under section 68/69A of the Act on the ground that assessee had in fact milled the paddy and obtained rice and other by-products, which were sold in the open market.

The assessee had also raised an alternative plea that since the case of the revenue was that assessee had milled the paddy and obtained rice and other by-products, the source of credits on account of sale of paddy shown in the books should be considered from the sale of rice and by-products. Therefore, no addition was liable to be made in view of the fact that source was known and the same was from books of accounts and business, more so, when the assessing officer had accepted the purchases shown in the books. However, Tribunal, Chandigarh Bench vide its order dated 28-8-1991 did not accept assessee's plea that sales of paddy shown in the books were genuine. Therefore, the order of the Commissioner (Appeals) in sustaining the addition of Rs. 33,87,560 under section 68/69A was upheld. This order was relied upon by the Commissioner (Appeals) while deciding the first appeals in these cases.

As regards revenue's appeals relating to addition of Rs. 8,23,781, the order of the Commissioner (Appeals) was set aside and restored to his file for fresh adjudication with a direction to meet the case of the revenue made at the assessment stage.

The Tribunal, however, failed to deal with the alternative plea taken by the assessee. Therefore, the assessee moved a miscellaneous petition, which was disposed of by the Tribunal vide order dated 20-11-1992. The first order of the Tribunal was recalled. After hearing the parties, the Tribunal allowed the plea raised by the assessee by recording the following finding in para 5 of its order dated 22-6-1993: "5. We have carefully considered the rival submissions as also the facts on record. The assessee in this case took the plea that it had sold paddy worth Rs. 33,87,550. The revenue authorities, however, came to the conclusion that no such paddy had been sold by the assessee and that only entries had been passed. The Tribunal also confirmed the aforesaid addition of Rs. 33,87,550. The position now is that as per the books of account, the assessee had shown sale of paddy amounting to Rs. 33,87,550. The department has not accepted such a set aside, and has proceeded on the basis that such paddy would have been milled by the assessee. An addition of Rs. 33,87,550 has been confirmed by the Tribunal on the ground that the assessee had credited an equivalent amount as sale of paddy, whereas no such sale took place. The question, therefore, arises as to what should happen to the sale of paddy shown by the assessee which has not been taken out for purposes of adjustment of the trading results. If the department pleads as it does, that the said paddy had been milled, then whatever profit accrued to the assessee on the sale of paddy has already been credited to the books of account in the shape of sale of paddy having been assessed at Rs. 33,87,550. We, therefore, agree with the learned counsel for the assessee that only the resultant profit on account of milling should be added. Since this matter has not been processed by the lower authorities on these lines and the question of yield has already been restored to the file of the first appellate authority, we consider it proper to send this matter back to the first appellate authority with the direction that he should ensure that while working out the total income of the assessee, the addition of Rs. 33,87,550 is not made twice-one by way of sale of paddy as shown by the assessee and second on account of sale of rice as contended by the department. Either the amount of Rs. 33,87,550 should be taken out from the ultimate addition, if any, on account of trading results or actual profits, if any, with reference to the milling of paddy should be added in the assessee's hands. We, however, wish to make it clear that since this is an alternative contention of the assessee, the assessee should not be placed in a position where it should be worse off than it was before raising the alternative contention." It may further be mentioned here that in pursuance of the above directions given by the Tribunal, the Commissioner (Appeals) re-decided the appeals vide his order dated 15-6-1994. After referring to the directions given by the Tribunal and the finding recorded by the assessing officer that part of the profits earned on milling of paddy and by-products was ploughed back in the books by way of sale proceeds of paddy, the learned Commissioner (Appeals) computed the total income of M/s Ganesh Rice Mills at Rs. 4,05,703. While doing so, the Commissioner (Appeals) reduced the amount of sale proceeds of paddy as shown in the P&L a/c from the sale proceeds of rice and by-products obtained from milling of paddy. No addition under section 68/69A was separately made. Both the revenue and the assessee filed cross-appeals before the Tribunal against the aforesaid order of the Commissioner (Appeals). In the grounds of appeal taken by the revenue, addition of Rs. 33,87,550 made under section 68/69A was not even contested by the revenue. It is clear from the following grounds of appeal taken by the revenue in ITA No. 921/Chandi/1994 for the assessment year 1988-89.

"1 On the facts and in the circumstances of the case, the learned Commissioner (Appeals) has erred in calculating the yield of husk at 21 per cent of 95 per cent of paddy milled (Permal and Basmati) against his decision in para 6 to adopt the yield of husk at 22 per cent of 95 per cent of paddy milled.

2. The learned Commissioner (Appeals) has further erred in applying the rate of Rs. 15 per quintal as against Rs. 30 per quintal applied by the assessing officer in respect of the valuation of husk without any basis.

3. The learned Commissioner (Appeals) has also erred in adopting the rate of Rs. 336 per qtl. against Rs. 700 applied by the assessing officer on Basmati Rice holding the quality of rice as Basmati when this point of Basmati Rice was never taken earlier before the assessing officer and also the appellate authorities i.e., Commissioner (Appeals) and Tribunal.

4. The learned Commissioner (Appeals) has further erred in allowing the milling charges at Rs. 1,50,000 on the milling of paddy which was shown to have been sold in the books of account of the assessee but actually milled by it, without any basis or proportion.

5. The appellant craves leave to add or amend the grounds of appeal before the appeal is heard and disposed off.

6. It is prayed that the order of the learned Commissioner (Appeals) be set aside and that the assessing officer restored.

In the ultimate analysis, no addition under section 68/69A has been made/sustained in appeal in the case of M/s Ganesh Rice Mills. As regards assessee's appeal, the only issue raised related to deduction of Rs. 6,021 under section 32AB, which was allowed by the assessing officer himself at the time of computing the assessment. These cross-appeals were decided by Tribunal, Chandigarh Bench vide its order dated 23-10-2000 in ITA Nos. 852 and 921/Chandi/1994 for the assessment year 1988-89, where the claim of the assessee under section 32AB was allowed. As regards the appeal of the revenue, the Tribunal held that expenses of Rs. 1,50,000 allowed by the Commissioner (Appeals) on milling of paddy were on the higher side. Therefore, the same were reduced to Rs. 75,000 and other grounds were dismissed. Since the issue regarding addition made under sections 68/69A was not even raised by the revenue, there was no question of deciding the same by the Tribunal.

From the facts discussed above, following position emerges from the above referred orders.

(a) The case of the revenue is that the alleged sales of paddy were bogus and the assessee had in fact milled the paddy and obtained rice and by-products, which were sold in the open market.

(b) Although the assessing officer has made addition under sections 68/69A on account of credits shown in the form of bogus sales of paddy, yet corresponding purchases of paddy have been accepted to be genuine because for the purposes of working out yield of rice and the by-products obtained from milling of paddy, the assessing officer has worked out the same on the basis of entire purchases of paddy including the paddy sold as such.

(c) The assessing officer has himself adjusted the sale proceeds of paddy against the sale proceeds of rice and by-products obtained from milling of such paddy. In case these receipts were plain and simple bogus credits and he was of the view that sale proceeds of rice and by-products obtained from milling of paddy were not at all brought in the books, the assessing officer ought to have made two additions, i.e., one under sections 68/69A total sale proceeds of rice, rice bran, phuk and paddy husk obtained without adjusting the addition made under sections 68/69A. But, in none of the cases, the assessing officer made two additions. Only difference between the rice and byproducts obtained from milling of paddy and as shown in the books was added.

(d) Even in the case of M/s Ganesh Rice Mills, which has been relied upon by the Commissioner (Appeals), no addition under sections 68/69A has ultimately been made by relying on the Tribunal's order dated 22-6-1993 and the revenue has accepted such order of the Commissioner (Appeals).

(e) Even in the present appeals, the revenue has taken identical grounds to the effect that the Commissioner (Appeals) was not justified in computing the taxable profits at the amounts mentioned therein.

Revenue has not taken a specific ground to the effect that additions under sections 68/69A and upheld by the Tribunal in the case of M/s Ganesh Rice Mills were wronglydeleted by the Commissioner (Appeals).

After setting out the backdrop and factual position of the case, I now proceed to record my findings in regard to various points mentioned above.

The first issue that requires to be decided by the Bench is whether the orders passed by the Commissioner (Appeals) are in conformity with the order dated 28-3-1996 of Tribunal in restoring the appeals to the file of the Commissioner (Appeals). While setting aside orders of the Commissioner (Appeals) in toto and restoring the same to his file, nowhere the Tribunal has recorded a finding that additions made under sections 68/69A were confirmed by relying on the order of the Tribunal in the case of M/s Ganesh Rice Mills (supra). The Tribunal has only directed the Commissioner (Appeals) to pass fresh orders keeping in view the directions given by the Tribunal in the second order dated 22-6-1993 in the case of M/s Ganesh Rice Mills. Therefore, the first order dated 20-8-1991 was not even referred to in this order of the Tribunal. All the appeals were treated as allowed for statistical purposes. If the Tribunal intended to uphold additions made under section 68/69A, it could have recorded such finding in the order and the appeals of the assessee ought to have been dismissed on this account. There is no such finding recorded by the Tribunal. Therefore, by no stretch of imagination one can conclude that the Tribunal has upheld the additions made under section 68/69A in the present cases. In view of these facts, I am of the considered opinion that the present orders of the Commissioner (Appeals) are in conformity with the directions given by the Tribunal.

The next issue that requires to be decided by the Bench is whether the Commissioner (Appeals) was justified in excluding the additions made under section 68/69A while redeciding the present appeals in terms of the directions given by the Tribunal in its order dated 28-3-1996. As mentioned above, the Tribunal has set aside all the additions including the additions made under section 68/69A in its second order dated 22-6-1993 in the case of M/s Ganesh Rice Mills (supra). There is nothing in the order of the Tribunal dated 28-3-1996 for setting aside the first orders passed by the Commissioner (Appeals) which could suggest that the Tribunal had upheld the additions under section 68/69.

Therefore, the Commissioner (Appeals) was expected to consider this issue at the time of redeciding the appeals and Bench is also required to record its findings whether the additions made under section 68/69A were indeed called for.

No doubt, in the first order dated 28-8-1991 passed in the case of M/s Ganesh Rice Mills (supra), the Tribunal had upheld the addition of Rs. 33,87,550 made under section 68/69A. However, the alternative plea of the assessee was not dealt with by the Tribunal while deciding the appeal. Therefore, the assessee moved a miscellaneous petition, which was accepted and order was recalled. The submissions of the assessee before the Tribunal were that whatever profit had accrued to the assessee on account of sale of paddy had already been recorded in the books of accounts and what was required to be assessed was profit from milling of paddy only. The Tribunal accepted this plea of the assessee.

The Tribunal had recorded a finding that only the resultant profit on account of milling should be added. The Commissioner (Appeals) was accordingly directed that while redeciding the appeal he should ensure that while working out the total income of the assessee, the addition of Rs. 33,87,550 is not made twice i.e., firstly on sale of paddy as shown by the assessee and secondly on account of sale of rice as contended by the department. The Tribunal also directed that either the amount of Rs. 33,87,550 should be taken out from the ultimate addition, if any, on account of trading results or actual profits, if any, with reference to the milling of paddy should be added in assessee's hands.

While redeciding the appeals the Commissioner (Appeals) has taken out the amount of Rs. 33,87,550 from the sale proceeds of rice and by-products obtained from milling of paddy sold and accordingly worked out the income at Rs. 4,05,703. Now, if we recast the trading account keeping in view the above directions of the Tribunal i.e., by excluding the sale proceeds of the paddy and by substituting the estimated receipts of rice and other by-products obtained from milling of paddy shown as sold, the net result would be only the difference as worked out by the Commissioner (Appeals). There is nothing in the second order of the Tribunal dated 22-6-1993 in the case of M/s Ganesh Rice Mills (supra), which could suggest that addition to be made in the manner directed by the Tribunal would be in addition to the addition already sustained under section 68/69A. In fact, there was a mistake in the original order in not dealing with the alternative plea of the assessee for which the order was recalled and aforesaid directions were given.

Even on merits, I am of the considered opinion that addition under section 68/69A is not called for. The facts discused above clearly show that the assessing officer has accepted the purchases of paddy as recorded in the books of accounts. No addition on account of unexplained purchases has been made. Now, the only contention of the revenue is that the assessee had actually milled the paddy and rice and other by-products obtained from such milling were sold in the open market. In fact, the assessing officer has himself accepted on p. 7 of the assessment order in the case of M/s Ganesh Rice Mills and as reproduced by my learned brother, JM, on p. 19 of the proposed order, that part of the amounts realised on sale of rice and its by-products were ploughed back in the form of credits in the books shown as proceeds from sale of paddy. The source of credits in the books is out of the sale proceeds of rice and by-products obtained from milling of such paddy. Therefore, the same stands explained. Even otherwise, the assessing officer has himself adjusted estimated sale, proceeds of rice and the by-products obtained from mining against the credits in the form of sale proceeds of paddy. For example, in the case of M/s Ganesh Rice Mills (supra) the assessing officer had found the difference in the yield of rice and the estimated receipts of rice and other by-products obtained from milling of paddy at Rs. 42,11,331. This amount was arrived at after adjusting the yield of rice and by-products as shown in the books. Against the addition of Rs. 42,11,331, the assessing officer himself adjusted an amount,of Rs. 33,87,550 and made further addition of Rs. 8,23,781. If the stand of the revenue was that credits in the form of sale proceeds of paddy had nothing to do either with the sale of paddy of rice and other by-products the assessing officer ought to have made two additions i.e., an amount of Rs. 33,87,550 plus sale proceeds of rice and by-products obtained from milling of paddy, which were not at all brought in the books of accounts. The addition would have been made at more than Rs. 68 lakhs or so. This was not the case. Therefore, it is clear that the assessing officer had added only the net difference after adjusting the addition made under section 68/69A. Even in the present cases, the assessing officer had not made two additions. The additions made under section 68/69A were adjusted against the yield of rice and by-products obtained from milling of paddy and only the difference was added in addition to the additions made under section 68/69A of the Act. Thus, it is clear that the mistake in the first order of the Tribunal was subsequently corrected by the Tribunal in its second order dated 20-8-1993, where the Tribunal had directed the assessing officer to reduce the amounts credited in the books in the form of sales of paddy from the expected receipts on sale of rice and byproducts and it could not be held that the addition made under section 68/69A was upheld.Even in case of undisclosed turnover in the form of unaccounted purchases and sales, only the resultant profit could be brought to tax.

It is not that the entire sale proceeds of unaccounted sales could be added. Reliance in this regard is placed on the following decisions and the judgment of Hon'ble Punjab & Haryana High Court : (ii) Tribunal, Chandigarh Bench's decision dated 18-8-1994 in the case of Goyal Mill Store v. Income Tax Officer, in ITA Nos. 1342 & 1327/Chd/1988; assessment year 1984-85 (cross- appeals), (iii) Tribunal, Pune Bench's decision dated 16-4-1982, in the case of Bastimal Prakashchandra & Co. v. Income Tax Officer (1982) 14 TTJ (Pune) 190, and (iv) Tribunal, Jodhpur Bench dated 21-7-2000 in the case of Income Tax Officer v. Naresh Fabrics (2000) 75 TTJ (Jd) 386.

In the recent judgment of Hon'ble Gujarat High Court in the case of CIT v. President Industries (.2002) 258 ITR 654 (Guj), it has been held that where unaccounted turnover in the form of undisclosed purchases and sales is found during search or survey, it stands to reason that only income relatable to such turnover is required to be estimated. It is only such profit so embedded in the sales, that can be charged and not the entire sale proceeds. The present cases of assessees stand rather on stronger footing because the purchases have been accepted to be genuine by the revenue authorities. The case of the revenue is that the paddy shown as sold was in fact milled and sale proceeds of rice and other-by-products obtained from such milling were ploughed back in the form of credits on account of sale of paddy. Thus, only the resultant profit earned on milling of paddy could alone be brought to tax.

Further, it may be mentioned that while setting aside the orders of the Commissioner (Appeals) and restoring the appeals to the file of the Commissioner (Appeals), the Tribunal directed the Commissioner (Appeals) to keep in view the directions given in its second order dated 20-6-1993 in the case of M/s Ganesh Rice Mills (supra). The first order of the Tribunal in M/s Ganesh Rice Mills, where the Tribunal had upheld the addition under section 68/69A was not even referred to. As discussed earlier, the Commissioner (Appeals) redecided the appeal in the case of M/s Ganesh Rice Mills (supra) where total income was computed at Rs. 4,06,703. No addition under section 68/69A was made while redeciding the appeal. The revenue filed, an appeal against the order of the Commissioner (Appeals). From the grounds of appeal, as reproduced in para 24 of this order, it is apparent that the revenue had not even raised a ground relating to deletion of addition of Rs. 33,87,550 under section 68/69A. This would show that the revenue had interpreted the second order of the Tribunal in a manner, which would not justify any addition under section 68/69A. In fact, even in the present cases, the revenue has not specifically contested the addition under section 68/69A. There is no such specific ground in the present appeals to the effect that the learned Commissioner (Appeals) was not justified in deleting the additions under section 68/69A. Even during the course of appeal proceedings before the Commissioner (Appeals), the assessing officer was asked to furnish the computation of income in view of the directions given in the order of the Tribunal. The discussion in the impugned orders of the Commissioner (Appeals) shows that the assessing officer had in fact furnished computation of income lower than what was sustained/computed in the impugned orders by the Commissioner (Appeals). This also shows that the revenue was of the view that no addition under sections 68/69A was called for in the present cases. In any case, once the revenue has accepted the order of the Commissioner (Appeals) in deleting the addition under section 68/69A in the case of M/s Ganesh Rice Mills, where the Tribunal had upheld such addition in the first order and the facts of the present cases are identical to the facts of M/s Ganesh Rice Mills, there is no justification for sustaining such additions under section 68/69A in the present appeals, I also rely on the order dated 26-2-1996 of Tribunal, Chandigarh Bench in the case of M/s Shankar Rice Mills, in ITA Nos. 306 & 451/Chd/1991 for the assessment year 1988-89, where on identical grounds, the Tribunal set aside the first order of the Commissioner (Appeals) and restored the matter to his file for fresh adjudication without recording a finding that addition made under sections 68/69A was confirmed.

Having regard to these facts and circumstances of the case and the legal position discussed above, I am of the considered opinion that the Commissioner (Appeals) was justified in not including the additions under section 68/69A in the total income. However, these findings would apply to such additions made by the assessing officer and not to such additions made by the Commissioner (Appeals) in the cases of M/s Punjab Rice Mills and M/s Bharat Rice Mills as these additions have been accepted by these assessees.

The next issue, which requires to be decided by the Bench, is whether, learned Commissioner (Appeals) was justified in determining the income at the figures mentioned in the respective impugned orders. As regards percentages of yield of rice, rice bran, phak and paddy husk, learned Commissioner (Appeals) has adopted the same percentages as done in the case of M/s Ganesh Rice Mills. The assessee had filed an appeal against the order in the case of M/s Ganesh Rice Mills contesting the percentages of yield adopted by the Commissioner (Appeals). The said appeal was decided by the Tribunal vide its order dated 23-10-2002 in ITA Nos. 852 & 921/Chd/1994, where the order of the Commissioner (Appeals) was upheld on this point. However, in that case also, the Commissioner (Appeals) had allowed extra expenses of Rs. 1,50,000 incurred on milling of 15500 qtls. of paddy, which was shown in the books as sold. However, the revenue had contested before the Tribunal that the extra expenditure allowed by the Commissioner (Appeals) on milling was excessive. Considering the submissions of both the parties, we had held that it would be fair to allow deduction on account of expenses at Rs. 75,000, which was incurred on milling of 15550 qtls. of paddy. The expenses allowed therefore worked out to Rs. 4.82 per qtl.

In all these cases, the learned Commissioner (Appeals) has allowed extra expenses @ Rs. 4 per 65 kg. bag of paddy milled, which works out to Rs. 6.15 per qtl. Relying on our aforesaid order in the case of M/s Ganesh Rice Mills (supra), I set aside the order of the Commissioner (Appeals) for this limited purpose and restore the issue to the file of the assessing officer for re-computing the total income by taking extra expenses on milling @ Rs. 4.82 per qtl.

As regards the other points referred to by the assessing officer in the respective orders, these have been duly dealt with by the Commissioner (Appeals) while redeciding the appeals. In all the cases, the information received from the DFSC shows that there was no short supply of levy rice by the assessee. Therefore, no extra benefit in the form of evasion of purchase tax, levy rice and other Govt. levies etc., was derived by the assessees. No addition was justified on this account.

The assessing officer had observed that assessee had made bogus purchases of rice to cover the yield of rice and by-products obtained from the milling of paddy, which was shown as sold in the books. No specific addition except in the case of M/s Mahalaxmi Rice Factory was made. Since these purchases were shown and accounted for in the books either in the form of sales or closing stock, I am of the opinion that learned Commissioner (Appeals) was justified in ignoring such addition.

As regards cash credits referred to by the assessing officer in the respective orders, the Commissioner (Appeals) has merely restored the issue to the file of the assessing officer for verification. Therefore, no interference is called for on this account.

In the case of M/s Mahalaxmi Rice Factory, the assessee had shown total purchases of paddy in the books at 43,321 qtls. but as per the information received from the DFSC, such purchases were reported at 43976 qtls. Thus, the assessing officer had observed that difference of 655 qtls. (43976 - 43321) represented unexplained investment of Rs. 1,14,625. On appeal, the Commissioner (Appeals) has ignored the unexplained investment on the ground that if the same are considered, corresponding deduction for the equal amount is to be allowed. I agree with such view because the same is in conformity with the judgment of Punjab & Haryana High Court in the case of CIT v. Bhalkla Bros. 10 TLR 45. However, I find that the assessee had also reported the yield of rice obtained from milling of 43976 qtls. of paddy to the DFSC, which means that the same had been duly reflected in the books of accounts though corresponding purchase of paddy was not shown in the books. The learned Commissioner (Appeals) has also allowed credit for the entire quantity of yield of rice and other by-products as shown in the books, which is inclusive of yield obtained from milling of 655 qtls. of paddy. However, the Commissioner (Appeals) has not taken into account 655 qtls. of paddy for the purpose of computing yield of rice and other by-products obtained therefrom. This is not correct. I, therefore, set aside the order of the Commissioner (Appeals) and restore this issue to the file of the assessing officer with a direction to estimate the yield of rice and other by products at the rates mentioned in Annex.-A of the impugned order, obtained from milling of 655 qtls. and estimate the total receipts by applying the rates mentioned therein. The amount so worked out would be included in the total income of the assessee in addition to the income already computed by the learned Commissioner (Appeals). I direct accordingly.

Subject to the observations made hereinabove, the orders of the Commissioner (Appeals) in determining the income at the amounts mentioned in the respective orders do not warrant any interference as these are found in conformity with the directions of the Tribunal given in the consolidated order dated 28-3-1996 and in the second order dated 22-6-1993 in the case of M/s Ganesh Rice Mills (supra).

In the light of detailed discussions in the preceding paragraphs, the orders of the Commissioner (Appeals) are confirmed on all the issues except in regard to the issue of allowing additional expenses incurred on milling of paddy in all the cases and further re-computation of income in regard to milling of paddy weighing 655 qtls. in the case of M/s Mahalaxmi Rice Factory in accordance with the direction given in para 28 of the'order for which orders of the Commissioner (Appeals) stand set aside and restored to the file of assessing officer.

In the result, appeals of the revenue are partly allowed for statistical purposes.

Differences having arisen between the learned Members in the above cases, the Hon'ble President, Tribunal has appointed me as Third Member under section 255(4) of Income Tax Act, 1961 to resolve them. These differences are reflected in the following questions: "Whether, on the facts and circumstances of the cases, can it be said that the order dated 29-8-1996 of the Commissioner (Appeals) (in ITA No. 1203/Chd/1996) in the case of M/s Bhasin Rice & General Mills Kurali and three separate orders of the Commissioner (Appeals) but all dated 5-8-1996 (In ITA Nos. 1203, 1204 and 1206/Chd/1996 in the cases of M/s Punjab Rice Mills, M/s Bharat Rice Mills and M/s Mahalaxmi Rice Factory respectively, passed in consequence upon the directions given by the Tribunal, Chandigarh Bench in its consolidated order dated 28-3-1996 in assessee's appeals in ITA Nos. 1121, 1130, 1127 and 1128 of 1992-all relating to assessment year 1988-89, are in conformity and in accordance with those directions of the Tribunal or not?" "(i). Whether, on the facts and circumstances of the case and the fact that the directions given by the Hon'ble Tribunal, while setting aside the issue relating to addition on account of sale of rice and by-products procured as a result of milling of the paddy, which was claimed by the assessee to have been sold as it is but, in fact, was not sold, amounted to having set aside the addition made under section 68/69A of Income Tax Act, 1961, in all these cases, also?" (ii). If the answer is in the affirmative, whether the Commissioner (Appeals) was justified in excluding deleting the additions made under section 68/69A while passing the impugned orders?" "Whether, on the facts and circumstances of the cases and directions given by the Tribunal, Chandigarh Bench in its consolidated order dated 28-3-1996 in assessees' appeals in ITA Nos. 1121/Chd/1992, 1130/Chd/1992, 1127/Chd/1992 and 1128/Chd/1992 (all relating to assessment year 1988-89) for restoring the appeals to the file of the Commissioner (Appeals), the Commissioner (Appeals) was justified in determining the taxable income at Rs. 3,07,480, Rs. 3,03,555, Rs. 2,68,650 and Rs. 3,33,320 in ITA Nos. 1202/Chd/1996, 1203/Chd/1996, 1204/Chd/1996 and 1206/Chd/1996 respectively.

The facts of the cases are fully and elaborately discussed by the two learned Members in their proposed orders and as this decision is to be read conjunctively with above orders, I deem it unnecessary to reproduce the detailed facts all over again. I would only be referring to the facts relevant to resolve the controversy.

All the four assessees in the period relevant to assessment year 1988-89 were carrying on the business of husking of rice. In their books of accounts (no books of accounts were produced), these assessees undisputedly showed the sale of paddy to the parties which the assessing officer held, was bogus and fictitious. Credits shown on account of sale of paddy were held to be assessees' own money from "undisclosed sources". The assessing officer further held that the assessees had suppressed yield of rice and other by-products like rice bran, phuk etc. and therefore, some addition was to be made on this count. He further found on enquiry from the office of the DFSC that the assessees did not show correct quantity of paddy purchased and milled.

So this was another item of suppressed income to be considered while making assessment. However, instead of making additions for each of the items referred to above, the assessing officer estimated total income of these assessees at a consolidated amount in the assessment orders.

The assessees impugned, above addition in appeal before the Commissioner (Appeals) and got some relief. All the same addition of different amounts held to be bogus sale of paddy, was sustained by the Commissioner (Appeals) and was the subjectmatter of further appeal before the Tribunal. The detail of such addition is as under There were six appeals before the Tribunal, four by the above assessees and two by the revenue in cases of M/s Punjab Rice Mills and Mahalaxmi rice Factory. All the appeals were disposed of by the Tribunal through its consolidated order dated 28-3-1996.

The Tribunal as per its brief order, set aside the impugned order of Commissioner (Appeals) and restored the matter to his file with the following directions: "We have heard the Representatives of the parties, perused the record and gone through the order passed in the case of M/s Ganesh Rice Mills (supra) and keeping in view the entire facts and circumstances of these cases, we set aside the orders under appeal and restore all these cases to the file of the learned first appellate authority to pass fresh orders, after due opportunity in terms of the directions given by the Tribunal in its order dated 22-6-1993 (supra). As regards other points, we express no opinion and learned Commissioner (Appeals) is directed to consider those afresh." It is relevant to mention here that learned JM in his proposed order has not taken into account the last two lines of above directions providing "as regards other points, we express no opinion and the Commissioner (Appeals) is directed to reconsider those points". The above direction clearly shows that the orders of Commissioner (Appeals) were completely set aside and was not maintained on any issue. Omission to note above two lines has contributed to some extent in the view that the learned Member ultimately adopted in his proposed order.

As there is reference to direction dated 22-6-1993 of the Tribunal given in the case of Ganesh Rice Mills (ITA No. 1502/Chd/1990 for assessment year 1989-90), it is necessary to take note of those directions also. The same are as below: "We have carefully considered the rival submissions as also the facts on record. The assessee in this case took the plea that it had sold paddy worth Rs. 33,87,550. The revenue authorities, however, came to the conclusion that no such paddy had been sold by the assessee and that only entries had been passed. The Tribunal also confirmed the aforesaid addition of Rs. 33,87,550. The position now is that as per the books of account, the assessee had shown sale of paddy amounting to Rs. 33,87,550. The department has not accepted such a set aside (sic) and has proceeded on the basis that such paddy would have been milled by the assessee. An addition of Rs. 33,87,550 has been confirmed; by the Tribunal on the ground that the assessee had credited an equivalent amount as sale of paddy, whereas no such sale took place. The question, therefore, arises as to what should happen to the sale of paddy shown by the assessee which has not been taken out for purposes of adjustment of the trading results. If the department pleads as it does, that the said paddy had been milled, then whatever profit accrued to the assessee on the sale of paddy has already been credited to the books of account in the shape of sale of paddy having been assessed at Rs. 33,87,550. We, therefore, agree with the learned for the assessee that only the resultant profit on account of milling should be added. Since this matter has not been processed by the lower authorities on these lines and the question of yield has already been restored to the file of the first appellate authority, we consider it proper to send this matter back to the first appellate authority with the direction that he should ensure that while working out the total income of the assessee, the addition of Rs. 33,87,550 is not made twice-one by way of sale of paddy as shown by the assessee and second, on account of sale of rice as contended by the department. Either the amount of Rs. 33,87,550 should be taken out from the ultimate addition, if any, on account of trading results or actual profit, if any, with reference to the milling of paddy should be added in the assessee's hands. We, however, wish to make it clear that since this is an alternative contention of the assessee, the assessee should not be placed in a position where it should be worse off than it was before raising the alternative contention." In compliance to aforesaid direction, the Commissioner (Appeals) computed the total income of the assessees at figures mentioned in the questions proposed by the learned Members. There is agreement between the learned Members and parties before me that facts and circumstances in all the four cases are identical. I, therefore, consider case of M/s Bhasin Rice Mills.

Learned Commissioner (Appeals), after remand from Tribunal, recomputed the assessee's income by taking into account 34672 qtls. of paddy milled by the assessee. He computed the assessee's income at Rs. 3,07,480 as per Annex. "A" which is given below : The products obtained on the basis of the order of Commissioner (Appeals) in the case of Ganesh Rice & General Mills is as follows: Purchase price of paddy consumed at Rs. 180.00 per qtl. on the basis of Income Tax Officer's order The revenue again challenged the orders of Commissioner (Appeals) before Tribunal and while disposing of the appeals of the four assessees through consolidated orders, the differences as per questions noted above have arisen between the learned Members. According to learned JM addition on account of sale of paddy shown (but held bogus in books by the assessing officer) stood impliedly confirmed under section 68/69A of Income Tax Act, 1961 by the Tribunal as per order dated 28-3-1996 and therefore, the Commissioner (Appeals) had no jurisdiction to go into the question of above additions. The Commissioner (Appeals) was merely to determine the additional profit arising from milling of paddy which was fictitiously shown to have been sold and credited in the books of account but was in fact milled. The learned Commissioner (Appeals) was not to determine the "total income" as he has wrongly done in these cases. Learned Commissioner (Appeals) had no jurisdiction to go into the question of addition already made under section 68/69A. Above income was to be added in the profit from the milling determined by the learned Commissioner (Appeals). The detail of the addition referred to by the learned JM is as under Learned AM did not agree with the view expressed by the learned JM. He separately considered the case of each of the assessee and held that no addition on account of credits for fictitious sale of paddy was sustained by Tribunal in their order remanding the matter to the learned Commissioner (Appeals). In fact, the Tribunal had specifically held that amount of sale proceeds of paddy credited in the books of accounts should not be added twice-once as sale of paddy and second time as profit for sale of products after milling the same (paddy).

Learned Commissioner (Appeals) was to determine the profit which the assessee derived on account of milling of paddy and the same was reasonably worked out by the learned Commissioner (Appeals). Learned AM further held that the Commissioner (Appeals) was required to determine the "total income" of the assessee as per directions of Tribunal and the same was correctly determined. The directions of the Tribunal were properly complied with. Learned AM made minor adjustments in respect of expenses allowed and referred to in para 29 of his proposed order. In the case of M/s Mahalaxmi Rice Factory, learned AM held that the Commissioner (Appeals) in the impugned order did not take into account the profit from milling of 655 qtls. of paddy which was not disclosed by the assessee as per information received from the DFSC. The said profit wag directed to be computed and added to the total income.

Subject to the above changes, the learned AM accepted the impugned orders of the Commissioner (Appeals) as properly and correctly made.

The learned AM specifically held that no additions under section 68/69A of the Act could be made in the four cases now before me.

I have heard Smt. Saroj Deswal, the learned departmental Representative for the revenue and Shri Sudhir Sehgal for the assessee. I have given careful thought to the rival submissions of the parties. I have also examined the material available on record. In order to resolve the controversy, I have to consider the import and implication of directions of the Tribunal dated 28-3-1996. In the aforesaid order, reproduced above, the Tribunal merely directed the Commissioner (Appeals) to pass a fresh order in terms of directions given by the Tribunal in its order dated 22-6-1993 in the case of M/s Ganesh Rice Mills. He was further directed to consider all other points raised in the appeals afresh. Earlier the orders of assessment were completely set aside as is evident from the operative portion of para 5 reproduced above.

To understand and appreciate directions dated 22-6-1993, a brief reference to the case of M/s Ganesh Rice Mills is necessary. In the aforementioned case, the assessee had credited Rs. 33,87,550 on account of sale of paddy. The revenue authorities held that the aforesaid entries were bogus and fictitious and no paddy was sold by the assessee. In fact, the paddy was milled and the assessee realised additional profit of Rs. 8,23,781. Accordingly the above amount was added besides addition of Rs. 33,87,550, representing fictitious sale of paddy. On appeal, the Commissioner (Appeals) deleted the addition of Rs. 8,23,781 holding that the profit from milling and sale of rice and other products was covered by addition of Rs. 33,87,550 and therefore, separate addition for alleged extra profit from milling of paddy, be not made. The assessee thereafter challenged the addition of Rs. 33,87,550 in appeal before the Tribunal but the Tribunal vide its order dated 28-8-1991 upheld the addition of Rs. 33,87,550 for credits representing bogus sales of paddy.

The assessee then moved a misc. application contending that addition of Rs. 33,87,550 was wrongly sustained as the said sum stood already credited in the books of accounts of the assessee. Thus, the sale of Rs. 33,87,550 was duly assessed as part of total income. The Tribunal accepted this contention of the assessee and issued directions dated 22-6-1993. As per aforesaid directions, addition of Rs. 33,87,550 was not to be made twice-one by way of sale of paddy as shown by the assessee and second on account of sale of rice as contended by the department. The addition of Rs. 33,87,550 was not sustained as, the said amount already stood credited in the books of accounts of the assessee. Only profit from the milling of paddy was to be computed and added. Learned AM has analysed the order and has referred to the consequent order passed by the Commissioner (Appeals) which was accepted by the revenue authorities. Thus, as per ultimate order, there is no addition of Rs. 33,87,550 in the case of M/s Ganesh Rice Mills.

Learned JM in the proposed order has held that addition on sale of paddy reflected in the books of accounts stood confirmed by the Tribunal and, therefore, the learned Commissioner (Appeals) had no jurisdiction to reconsider above addition. In order to prove the above point, learned JM had made detailed reference to case of M/s Ganesh Rice Mills. He has started with the assessment order and finished with the orders of Tribunal in original appeal and on misc. application.

Reliance has been placed on extensive quotations from above referred to orders/decision, I have carefully considered the above references. In my opinion, the directions of the Tribunal dated 28-3-1996 read with directions dated 22-6-1993 are quite clear and only extra profit from milling of paddy stated to be sold as such, was to be determined. I would elaborate on the above in the following paras: As already stated, all the four cases turn on identical facts. Any conclusion reached on consideration and discussion of one case could be applied in all other cases as well. I, therefore, proceed to consider the case of M/s Bhasin Rice & General Mills.

Learned JM at p. 64 of the order has referred to various additions made by the assessing officer and how they were set off against the total income taken at Rs. 64 lakhs. It has been observed as undew.

"The total income of Rs. 64,00,000 estimated in exercise of powers available under section 144 of the Act, was arrived at by considering and was inclusive of the following additions: (i) Addition of Rs. 58,69,980 under section 68/69A of the Act on the same reasoning and basis as in the case of M/s Ganesh Rice Mills (p. 7 of the assessment order).

(ii) Addition of Rs. 59,64,694 or Rs. 60,00,000 which the assessing officer was going to make on account of fictitious purchases of rice, bardana and phuck etc., (p. 8 of the assessment order) subject to set off against the addition under section 68/69A as was in case of M/s Ganesh Rice Mills.

(iii) Fresh loan of Rs. 27,000 and fresh credit of Rs. 41,000 in the account of Mrs. Rakesh Bala Garg as well as disallowance liable to be made out of unproved expenses (p. 8 of the assessment order). Subject to set off against the addition under section 68/69A as was in case of M/s Ganesh Rice Mills.

On a perusal of the assessment order dated 22-1-1991 in the above case, it is seen that the said assessee did not produce books of account and therefore, the assessing officer proceeded under section 144 of Income Tax Act, 1961. He collected information from the department of District Food and Civil Supplies Controller, Ropar and found that the assessee had sold paddy as per information given in their letter dated 26-7- 1990 as detailed below: The assessing officer held that no paddy was sold by the assessee. In fact, paddy was milled and rice and by-products were obtained which were sold outside the books of accounts. The sale proceeds of paddy represented unexplained investment and concealed income of the assessee.

The assessing officer further observed that yield of rice bran, phuck, etc. shown was low in comparison to yield fixed by the Punjab Agriculture University. The assessing officer accordingly held that a sum of Rs. 35,000 would be considered in making the estimate' of the income of the assessee.

The assessing officer again reverts to the sale of paddy reported by the DFSC and held that 32611 qtls. of paddy was sold outside the books of account at the rate of Rs. 180 per qtl. and a sum of Rs. 58,69,980 realised. This fact was again to be kept in view in estimating the assessee's income, according to the assessing officer.

From the trading account, the assessing officer found that the assessee had shown purchases of paddy, rice, bardana and phuck etc., at Rs. 1,32,54,694. Out of the total purchases, the purchase of paddy was estimated at Rs. 72,90,000 (46.58 qtl. reported by DFSC @ Rs. 180 per qtl. approximately). The balance purchases of Rs. 59,64,694 (Rs. 1,32,50,694 minus Rs. 72,90,000) of rice and other by-products was held to be "abnormal" in the case of a rice sheller. The purchases were held to be fictitious and were held to have been made to cover up the by-products extracted out of paddy shown as sold but actually shelled.

The calculation was stated to be the yard stick to arrive at the concealed income in this case.

The assessing officer referred to unsecured loans of Rs. 27,000 and Rs. 41,000 in the name of Mrs. Rakesh Bala Garg and Ms. Vandana Bhasin. The genuineness of above loans was not verifiable in the absence of books of account.

In the ultimate para, the assessing officer computed the total income of the assessee at Rs. 64 lakhs with the following observations: "Considering all the facts and circumstances of the case discussed in the foregoing paragraphs, assessee's total income is estimated at Rs. 64 lakhs which will cover every possible leakage of revenue on account of bogus sales of paddy shown, sales of rice and other by-products procured out of the paddy milled but low yield shown which was sold outside the books of accounts expenses of inadmissible nature, unsecured loans introduced, unexplained investments etc." It is evident from the above that the assessing officer took into account several understatements of income but ultimately rested his estimate of total income at Rs. 64 lakhs. It is further clear that the estimated income is not total of all the items which the assessing officer considered could be added. In fact, to be fair to the assessing officer, it would be more appropriate to hold that he mentioned various items which influenced his ultimate estimate of income without separately adding them. The various items were kept in view in estimating assessee's income. The assessing officer's yardstick of assessment was addition and disallowance of purchases of paddy amounting to Rs. 72,90,000. It is not easy to say as to which item and to what extent influenced the assessing officer to reach magical figure of estimated income of Rs. 64 lakhs. Be that as it may, it is clear that the assessing officer did not add Rs. 58,69,980 and Rs. 59,64,694 under section 68/69A of Income Tax Act, 1961 for fictitious sale of paddy and purchase of paddy. The assessee did not produce books of account before the assessing officer. Thus, no fictitious entries of sale of paddy were seen or noticed by the assessing officer to apply even remotely the provisions of section 68 of the Act. It is unimaginable that even without books of account, addition of cash credit or unexplained investment could be made in these cases. The assessment orders do not give any clue of any addition actually made under section 68/69A of Income Tax Act, 1961. It is not possible to hold that the assessing officer made additions of Rs. 58,69,980, Rs. 59,64,694 and Rs. 60,00,000 under section 68/69A of Income Tax Act, 1961. When additions on line are not seen to be made on fair reading of the assessment order, it is not possible to hold that such additions were made on consideration of background in the case of M/s Ganesh Rice Mill. In my considered opinion, it is not permissible to go beyond the record of the case. The order of Tribunal which gave rise to the controversy came much later on surface than the assessment order in question. Thus on a fair and reasonable reading of the assessment order, I hold that no addition under section 68/69A of Income Tax Act, 1961 Act was made in the assessment order. There are contradictions in the assessment order and the same cannot be said to have been passed in accordance with law. It was required to be and was rightly set aside by the Tribunal. Therefore, even if for the sake of agreement, it is accepted that addition under section 68/69A was made by the assessing officer, no such addition was sustained by the Tribunal. The entire assessment was set aside for de novo assessment in the light of directions of the Tribunal dated 22-6-1993.

It is true that the first and basic order was passed in the case of M/s Ganesh Rice Mill and that order dated 22-6-1993 was to be followed and applied in the four cases in hand. It is further true that addition of credits on account of sale of paddy was held to be bogus and was confirmed by Tribunal in original order and, therefore, necessity to move a Misc. Application arose in the above case. The Tribunal held that a mistake was committed in confirming double addition of Rs. 33,87,550 and, therefore, the rectification order was passed. It was done by a competent Bench and there is neither any power nor any necessity with a co-ordinate Bench deciding cases in hand to criticise the order or the pleas advanced which led to the passing of the above order. The findings recorded and the directions given are also clear.

Whatever might be the basis of addition of Rs. 33,87,550 as per the earlier order, in the order under reference dated 22-6-1993, the Tribunal accepted that profit that accrued to the assessee has been credited in the books of account in the shape of sale of paddy and assessed at Rs. 33,87,550. The findings debased and cancelled anything held to be contrary in the orders of the revenue authorities and the Tribunal. It is, therefore, a futile exercise to stress upon and glorify contrary findings by repeatedly quoting them from different orders having no existence. It is not possible under the law to revive these dead findings howsoever hard one might try. Having accepted above position, the Tribunal in its order on the misc. application proceeded and further recorded an agreement with the learned counsel for the assessee that only resultant profit from milling was to be added. The Tribunal further thought it proper to remit the matter to the first appellate authority with clearcut directions that "he should ensure that while working out the total income of the assessee, the addition of Rs. 33,87,550 is not made twice-one by sale of paddy as shown by the assessee and second on account of sale of rice as contended on behalf of the revenue". The Tribunal further made the position clear by directing that either the amount of Rs. 33,87,550 should be taken out from the ultimate addition, if any, on account of trading results or actual profit if any, with reference to milling of paddy should be added. Where is the scope to hold that the addition of Rs. 33,87,550 was sustained by the Tribunal? There is not one but several clear indications in the order that credits aggregating to Rs. 33,87,550 were not only accepted but the amount was required to be set off and deducted from the ultimate trading results if actual profit of sale of paddy is not separately worked out. The argument of the revenue that addition of Rs. 33,'87,550 be sustained was specifically rejected by the Tribunal. In view of above clear observations, it is not possible for the revenue to argue again that addition of Rs. 33,87,550 was sustained by the Tribunal. If above addition was sustained, on what issue the matter was remitted to the revenue authorities? Further, in uncertain terms the Tribunal directed that addition of Rs. 33,87,550 should not be made twice-one of additions was accepted to be shown by the assessee in the sale of the paddy. The addition of the same amount was specifically prohibited to be made. The Tribunal used such strong words as "ensure" to convey its mind and intention. It would have been unfortunate if second addition inspite of clear prohibition contained in the directions of the Tribunal was made. Ironically, the stand of the revenue is again the same. It is argued that the learned Commissioner (Appeals) should have added Rs. 33,87,550 or the like amount in fresh assessment which the Tribunal specifically prohibited to be added. There is, therefore, no scope to hold that additions of Rs. 33,87,550 or of similar amounts were to be made or should have been made by the learned Commissioner (Appeals). The directions of the Tribunal are clear and, therefore, there is no scope to raise this controversy all over again.

It is very important to keep in mind that the learned Commissioner (Appeals) was to compute total income of these assessee in compliance with the directions of the Tribunal. He was to give effect to the order of the Tribunal. To see whether he correctly followed the directions of the Tribunal, the Bench has to put itself in the shoes of the Commissioner (Appeals). So the question is whether the learned Commissioner (Appeals) for deciding the matter should have looked into assessment and appellate record in the case of Ganesh Rice Mills, criticise the pleas of the assessee in misc. applications and cover so many other aspects as has been done in the proposed order? In my opinion, learned Commissioner (Appeals) rightly concentrated on the directions of the Tribunal and gave effect to them by determining the total income of these assessee.

In the light of above discussion, I have no hesitation to hold that no addition under section 68/69A was confirmed by the Tribunal. In fact, no addition under above provisions was made by the assessing officer as is evident from the above elaborated discussion. But then both the learned Members have held that addition for sale of paddy was made by the assessing officer under section 68/69A of Income Tax Act, 1961 and as such addition was the subject-matter of appeal before the Tribunal in ITA No. 1127 etc., disposed off vide order dated the 28-3-1996. From the order passed by the Tribunal a possible inference can be drawn that the Tribunal considered the question for addition under section 68/69A of the Act. Not only that, even the Commissioner (Appeals) in some impugned orders has taken into account the addition made on account of cash credits which means addition under section 68 of Income Tax Act, 1961. In the light of above, I am hesitant in recording that no addition under section 68/69A was made by the assessing officer. In my considered opinion, it is not permissible for the Third Member to take a view contrary to the view taken by both the learned Members.

Notwithstanding the legal position, I have no wish to further complicate the matter, I, therefore, consider it safe to agree with both the Members that in assessment order some additions under section 68/69A were made by the assessing officer and such additions were the subject-matter of the appeal before the Tribunal. The aforesaid finding, in my view, does not affect my aforesaid conclusion for the following reasons.- (i) That when the matter was taken up by the Tribunal in the four cases, the entire assessments were set aside with the directions to the Commissioner (Appeals) to recompute the total income in do novo assessments. Nothing stated in the assessment order in the light of order of the Tribunal survived. The total income was to be computed in the light of directions of the Tribunal and in accordance with law. It has rightly been computed of course, subject to minor changes made by the learned AM in his proposed order. I agree with the changes suggested by the learned AM as these are consistent and in line with assessment made in other cases.

(ii) The Commissioner (Appeals), in the impugned order, after making addition on account of cash credits, has deducted an identical amount on account of sale of paddy shown in the P&L a/c. Thus, the effect of addition on account of alleged cash credits has been neutralised.

Learned Commissioner (Appeals) has correctly read and given effect to the directions of the Tribunal.

I, accordingly, answer question Nos. 1 & 2 proposed under section 255(4) in the affirmative. As far as question No. 3 is concerned, I hold that subject to small changes proposed by the learned AM, learned Commissioner (Appeals) was justified in assessing the total income at figures suggested in question No. 3.

The cases should now be placed before a regular Bench for passing appropriate orders in accordance with law.

On a difference of opinion between the Members constituting Division Bench, the following questions were referred to Third Member for his opinion under section 255(4) of Income Tax Act, 1961: "1. Whether, on the facts and circumstances of the cases, can it be said that the order dated 29-8-1996 of the Commissioner (Appeals) (in ITA No. 1203/Chd/1996) in the case of M/s Bhasin Rice & General Mills, Kurali and three separate orders of the Commissioner (Appeals) but all dated 5-8-1996 (In ITA Nos. 1203, 1204 and 1206/Chd/1996 in the cases of M/s Punjab Rice Mills, M/s Bharat Rice Mills and M/s Mahalaxmi Rice Factory respectively, passed in consequence upon the directions given by the Tribunal, Chandigarh Bench in its consolidated order dated 28-3-1996 in assessee's appeals in ITA Nos. 1121, 1130, 1127 and 1128 of 1992-all relating to assessment year 1988-89, are in conformity and in accordance with those directions of the Tribunal or not?" "2. (i) Whether, on the facts and circumstances of the case and the fact that the directions given by the Hon'ble Tribunal, while setting aside the issue relating to addition on account of sale of rice and by-products procured as a result of milling of the paddy, which was claimed by the assessee to have been sold as it is but, infact, was not sold, amounted to having set aside the addition made under section 68/69A of Income Tax Act, 1961, in all these cases, also?" "(ii) If the answer is in the affirmative, whether the Commissioner (Appeals) was justified in excluding deleting the additions made under section 68/69A while passing the impugned orders?" "3. Whether, on the facts and circumstances of the cases and directions given by the Tribunal, Chandigarh Bench in its consolidated order dated 28-3-1996 in assessees appeals in ITA Nos. 1121/Chd/1992, 1130/Chd/1992, 1127/Chd/1992 and 1128/Chd/1992 (all relating to assessment year 1988-89) for restoring the appeals to the file of the Commissioner (Appeals), the Commissioner (Appeals) was justified in determining the taxable income at Rs. 3,07,480, Rs. 3,03,555, Rs. 2,68,650 and Rs. 3,33,320 in ITA Nos. 1202/Chd/1996, 1203/Chd/1996, 1204/Chd/1996 and 1206/Chd/1996 respectively." Hon'ble Vice President (now Hon'ble President), as Third Member, has concurred with the view of AM in all the aforesaid cases. Both the parties were heard again and both agreed that majority view should be given effect to. In conformity with the majority view, the impugned orders of Commissioner (Appeals) in all the four cases are set aside and the issue is restored to the file of assessing officer for re-computing the total income by taking extra expenses incurred on milling of paddy @ Rs. 4.82 per qtl. as against expenses allowed by the Commissioner (Appeals) @ Rs. 6. 15 per qtl. as mentioned in para. 29 at p. 69 of the order of AM.In addition to the above, the assessing officer is further directed in the case of M/s Mahalaxmi Rice Factory in ITA No. 1206/Chd/1996 for assessment year 1988-89 to take into account the yield of rice and other by-products obtained from milling of 655 qtls. of paddy and take the value of the same at the rates mentioned in Annex. "A" of the order of Commissioner (Appeals) and include the same in total income of the assessee. Respective grounds of appeal of the revenue in all the cases are partly allowed.