Assistant Commissioner of Income-tax Vs. Kohinoor Marbles, Tiles and Kota Stone Syndicate - Court Judgment

Excerpt:
- - a search was conducted at the premises of the assessee on january 5, 1994, and a number of account books, loose papers, documents as well as valuables were seized during the course of search operations. the commissioner of income-tax held that the assessee-appellant has failed to controvert the findings of the assessing officer and accordingly dismissed the appeal. the finding in this regard recorded by the commissioner of income-tax (appeals) as well as the assessing authority also deserves to be quashed. 6,26,668. 5. consequently, we allow this appeal, set aside the orders of the tribunal and the commissioner of income-tax (appeals) as well as the assessing authority to the extent it pertains to the addition of rs.n.n. mathur, j. 1. this appeal under section 260a of the income-tax act, 1961, has been filed against the order of the income-tax appellate tribunal, jaipur, dated october 26, 1998. this court by order dated march 8, 2000, found the following substantial question of law involved to be decided in this appeal: 'whether the tribunal was right in deleting the addition of rs. 6,26,668 on account of under-invoicing simply on the ground that no addition is possible by making presumption and by generalisation notwithstanding the fact that the assessing officer while making this addition had verified the seized documents and the total sales, neither reflected nor the assessee has submitted satisfactory reply on account of undeclared sales and receipts ?' 2. the brief facts giving rise to the instant appeal are that the return was filed by the assessee-respondent, kohinoor marbles, tiles and kota stone syndicate, jaipur, on july 18, 1990, declaring the income of rs. 48,230 and the same was processed under section 143(1)(a) by the income-tax officer, ward-2(9), jaipur. a search was conducted at the premises of the assessee on january 5, 1994, and a number of account books, loose papers, documents as well as valuables were seized during the course of search operations. the assessing authority called upon the respondent-assessee to explain the entries in the account books/papers/documents seized. the assessee was asked to explain the values. considering the explanation given by the assessee, the assessing officer made addition for unexplained and unrecorded sales. he also made an addition for unexplained deposits in the bank. he also added the amount for under-invoicing. the order of the assessing authority for the assessment year1990-91, dated february 17, 1997, was challenged before the commissioner of income-tax (appeals), ajmer. the commissioner of income-tax held that the assessee-appellant has failed to controvert the findings of the assessing officer and accordingly dismissed the appeal. a second appeal was preferred before the income-tax appellate tribunal, jaipur. the tribunal found that the search operations under section 132 were carried out by the department of various group concerns located at jaipur, ajmer, kishangarh and ramganjmandi. the assessee concern is located at jaipur. the tribunal from the letter of satish agarwal found that caption sales do not pertain to the other concerns located at ramganjmandi. the tribunal held that the concerned sales should not be incorporated in the assessee-firm. on grounds nos. 2 and 3, the tribunal found that most of the amounts pertained to other associated concerns. some of the amounts were considered twice. some amounts did not represent the sale at all and some of the amounts did not pertain to the year under consideration. considering all the facts and circumstances of the case, the tribunal remitted the matter to the assessing officer with the direction that the amounts pertaining to other concerns should not be added in the assessee's case merely because papers were found in the assessee's case. the tribunal made it clear that the said papers were linked with the documents pertaining to other concerns and as such no addition could have been made in the assessee's case. 3. with respect to ground no. 4, i.e., the addition of rs. 6,26,668, on account of alleged under-invoicing in respect of whole of the sale of the assessee, the tribunal held that no addition was possible for making presumption and generalisation. the tribunal made the said observation in view of the assessment when made in case of other groups, namely, garg granites pvt. ltd., in i. t. a. no. 1367/jp of 1997 and garg marmo tiles pvt. ltd. in i. t. a. no. 2092/jp of 1996. the tribunal also observed that the addition has to be restricted only to the seized material. it was further observed that in the absence of material and on account of the fact that the addition was based on presumption, the addition was liable to be deleted. 4. in our view, the tribunal while observing that no addition is possible by making presumption and generalisation has fallen in the same error. it appears from the order of assessment that the addition of rs. 6,26,668 was made on account of under-invoicing. it also appears that this was done after verifying the seized documents. it was further found that the assessee had adopted a practice of under-invoicing its sales. thus, the finding of the tribunal is not sustainable. the finding in this regard recorded by the commissioner of income-tax (appeals) as well as the assessing authority also deserves to be quashed. the assessing authority should make a reassessment after hearing the parties and on the basis of the material available on record with respect to addition of rs. 6,26,668. 5. consequently, we allow this appeal, set aside the orders of the tribunal and the commissioner of income-tax (appeals) as well as the assessing authority to the extent it pertains to the addition of rs. 6,26,668 and direct the assessing authority to readjudicate the subject return afresh after hearing the parties and taking into consideration the material which came to the light during the course of the search and seizure proceedings and on which basis the belief of under-invoicing was entertained. no order as to costs.