Judgment:
D.A. Mehta, J.
1. Both these appeals are taken up for hearing together as they emanate out of the common order of the Tribunal dated 12-1-2007. Tax Appeal No. 438 of 2008 arises out of the order passed in the appeal filed by the assessee before the Tribunal, while Tax Appeal No. 439 of 2008 arises out of the order passed in the appeal filed by the revenue before the Tribunal.
2. Appellant-revenue has proposed the following questions in respective appeals.
Tax Appeal No. 438 of 2008:
(A) Whether the Appellate Tribunal has correctly appreciated the facts on record so as to direct the Assessing Officer to compute the unaccounted income in respect of under-invoicing on the figure of Rs. 68,72,970 at the rate of 36.41 per cent of the sales to outsiders, when the Assessing Officer had estimated the under-invoicing at the rate of 50 per cent of the sales to outsiders after taking into account the seized material ?
(B) Whether the Appellate Tribunal has correctly appreciated the facts on record so as to direct the Assessing Officer to allow the entire claim of Rs. 8,39,836 including the unaccounted expenditure claimed by the assessee, when the Assessing Officer had already allowed unaccounted expenditure of Rs. 3,50,184 as evidenced from the seized material ?
(C) Whether the Appellate Tribunal has correctly appreciated the facts on record so as to accept the assessee's contention that deficit in marble slab should be set off from the surplus of marble tiles without taking note of the production process and the wastage ?
Tax Appeal No, 439 of 2008:
(A) Whether the Appellate Tribunal has correctly appreciated the facts on record so as to direct the Assessing Officer to compute the unaccounted income in respect of under-invoicing on the figure of Rs. 68,72,970 at the rate of 36.41 per cent of the sales to outsiders, when the Assessing Officer had estimated the under-invoicing at the rate of 50 per cent of the sales to outsiders after taking into account the seized material ?
(B) Whether the Appellate Tribunal has correctly appreciated the facts on record so as to direct the Assessing Officer to allow the entire claim of Rs. 8,39,836 including the unaccounted expenditure claimed by the assessee, when the Assessing Officer had already allowed unaccounted expenditure of Rs. 3,50,184 as evidenced from the seized material ?
(C) Whether the Appellate Tribunal has correctly appreciated the facts on record so as to accept the assessee's contention that deficit in marble slab should be set off from the surplus of marble tiles without taking note of the production process and the wastage ?
(D) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the addition made in respect of unaccounted sales amounting to Rs. 7,31,602 ?
(E) Whether the Appellate Tribunal is right in law and on facts in confirming the order passed by the CIT(A) deleting the addition of Rs. 12,86,242 made in respect of unaccounted cash ?
3. The assessment year in question is 1991-92.
4. Heard the learned Senior Standing Counsel for the appellant. It was submitted that the Tribunal has committed an error in disturbing the order made by the Assessing Officer by making an estimate different than the estimate made by the Assessing Officer which was based on the seized material.
5. The respondent-assessee is the owner of mines at different sites from which the assessee was extracting marble blocks. Such marble blocks are converted into slabs and marble tiles are manufactured from such slabs. For this purpose, the assessee also gets manufacturing done through different concerns on job work basis. It appears that on 21-2-1991 proceedings under Section 132 of the Income-tax Act, 1961 ('the Act') took place at the premises of the assessee and other two concerns. Certain documents were recovered for the period from 13-10-1990 to 19-2-1991. The Assessing Officer worked out unaccounted sales for the entire financial year namely from 1-4-1990 to 31-3-1991. Unaccounted sales were worked out on the basis of certain instances of under invoicing. The assessee accepted that unaccounted transactions took place between 1-4-1990 to 19-2-1991. The Assessing Officer took sales on the basis of under invoicing at a figure of Rs. 78,73,938 and applying average rate of 50 per cent made addition.
6. The assessee carried the matter in appeal before Commissioner (Appeals) who accepted the submission of the assessee that actual sales not accounted up to the date of search on 19-2-1991 were to the tune of Rs. 68,72,970. However, Commissioner (Appeals) adopted rate of 40 per cent as being sales which were under-invoiced.
7. Both, the assessee and the revenue, carried the matter in appeal before the Tribunal. The Tribunal sustained the figure of unaccounted sales at Rs. 68,72,970 but adopted rate of under invoicing at 36.41 per cent. For this purpose the Tribunal has recorded the following findings:
Coming to the issue whether the under invoicing should be taken @ 20 per cent of the actual turnover as accepted by Shri K.L. Thakur in this statement recorded under Section 132(4) or should be taken @ 50 per cent, we have gone through the material as relied before us. We find that the Assessing Officer has given instances for the under invoicing @ 34 per cent, 66 per cent and 80 per cent in three instances. The assessee pointed out that there was no under invoicing so far the 80 per cent instance is concerned. The assessee also submitted the 4 instances where the under invoicing varied from 3 per cent to 15 per cent, 18 per cent instances where there was no under invoicing. This fact has not been denied by the parties before us. The assessee also submitted before CIT(A) that the actual under invoicing from October 1990 to 19-2-1991 is @ 36.41 per cent. The CIT(A), therefore, directed the Assessing Officer to estimate the rate of under invoicing @ 40 per cent. In our opinion when the assessee has worked out the average under invoicing @ 36.41 per cent, the CIT(A) should have applied the rate of 36.41 per cent instead of 40 per cent. We have also noted that the assessee has actually disclosed a sum of Rs. 23,35,947 in revised return. This amount represent the total disclosure. We, therefore, direct the Assessing Officer to compare the amount of unaccounted income from under-invoicing by applying @ 36.41 per cent on the total sales made to the outside parties prior to the date of search, i.e., aggregating to Rs. 68,72,972. Since the assessee has already disclosed a sum of Rs. 23,35,947 lakhs, therefore, the income so worked out on account of under invoicing be reduced by Rs. 23,35,947 lakhs and the addition to this extent is sustained. Thus the ground No. 2 of the assessee's appeal and ground No. 1 of the revenue's appeal are disposed of accordingly.
8. Thus it is apparent that the entire controversy has been resolved on the basis of the facts and evidence on record. As to what should be the percentage adopted in a given set of facts of a case is a question of fact and it is not possible to accept the contention of the revenue that the impugned finding of the Tribunal gives rise to a question of law, much less a substantial question of law.
9. Second issue relates to deduction of unaccounted expenditure amounting to Rs. 8,39,836 claimed by the assessee. The Assessing Officer allowed deduction at a sum of Rs. 3,50,184 on the basis of unaccounted expenditure incurred for 130 days from 13-10-1990 to 19-2-1991 on the basis of the seized material. The assessee had claimed Rs. 8,39,836 on the basis of expenditure for the entire period of 325 days from 1-4-1990 to 19-2-1991.
10. When the matter was carried in appeal, Commissioner (Appeals) made further estimate and allowed further sum of Rs. 2 lakhs while retaining balance amount. Both the assessee and the revenue carried the matter in appeal before the Tribunal.
11. The Tribunal in its impugned order has recorded that it is an admitted fact that copy of the seized diary contains unaccounted sales and unaccounted expenditure for the period from 13-10-1990 to 19-2-1991 and this fact has been verified by the Tribunal from the evidence available at page Nos. 32 to 82 of the paper book filed before the Tribunal. The Tribunal has thereafter stated that if unaccounted sales and income therefrom is estimated for the period from 1-4-1990 to 19-2-1991 the assessee cannot be denied deduction of corresponding expenditure for the period between 1-4-1990 to 12-10-1990. Therefore, the Tribunal has stated that once the income is estimated for the entire period the expenditure has to be correspondingly estimated and, accordingly, deleted the disallowance sustained by Commissioner (Appeals).
12. There is no legal infirmity in the impugned order of the Tribunal on this count considering the fact that the Tribunal has appreciated the evidence on record and thereafter recorded the finding of fact. Hence, no question of law, much less a substantial question of law can be said to arise out of the order of the Tribunal on this count.
13. Insofar as third question is concerned, on the basis of common inventory of the assessee and two other concerns, the Assessing Officer worked out discrepancy in stock, as under:
---------------------------------------------------------------------Marble block (deficit) 0.897 Cu. Mtr. Rs. 3,050---------------------------------------------------------------------Marble Slab 758.139 Sq. Mtr. Rs. 2,65,348(deficit)---------------------------------------------------------------------Marble tiles (surplus) 918.273 Sq. Mtr. Rs. 1,51,575---------------------------------------------------------------------
The Assessing Officer made addition of Rs. 4,19,913 by stating that the discrepancy could not be reconciled.
14. When the assessee carried the matter in appeal before Commissioner (Appeals), it was accepted by the assessee that the discrepancy in relation to marble block could not be reconciled and the assessee accepted the same. However, insofar as discrepancy in stock of marble slabs and marble tiles is concerned, it was submitted that deficit in stock of slabs would be taken care of by surplus in stock of marble tiles because tiles are manufactured from slabs. Commissioner (Appeals) did not accept the contention of the assessee and sustained the order of the Assessing Officer holding that if the Assessing Officer so desires total addition could be alternatively taxed in the hands of the assessee and two concerns.
15. When the matter was carried in appeal before the Tribunal, the Tribunal accepted the stand of the assessee that so far as shortage of stock of marble blocks is concerned, addition is required to be sustained. In relation to discrepancy in stock of slabs and tiles is concerned, the Tribunal has noted that it is an admitted fact on record that the inventory of three concerns was mixed up and, therefore, deficit of slabs is set off against excess stock of tiles. Deficit stock of slabs will be only to the extent of 160 Sq. Mtr. The Tribunal has thus retained addition partially by sustaining the same at Rs. 19,725 while deleting rest of addition.
16. Even in relation to this ground it is an admitted fact that controversy has been appreciated on the basis of facts and evidence on record and the impugned order of the Tribunal on this count does not give rise to any question of law, much less a substantial question of law.
17. In relation to Question Nos. 4 and 5 of Tax Appeal No. 439 of 2008 the facts have been recorded from paragraph No. 26 of the impugned order of the Tribunal. Learned Counsel for the appellant could not point out as to how the said findings of fact on appreciation of the evidence are incorrect. In the circumstances, no interference is warranted on this count. The Tribunal's order in relation to aforesaid two questions namely Question Nos. 4 and 5 does not give rise to any question of law, much less a substantial question of law.
18. Accordingly, both these appeals are dismissed.