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TAXAP/950/2009 7/ 7 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No. 950 of
2009
=========================================================
COMMISSIONER
OF INCOME TAX-VI - Appellant(s)
Versus
SACHDEVA
STEEL PRODUCTS - Opponent(s)
=========================================================
Appearance
:
MRS MAUNA M
BHATT for
Appellant
None for
Opponent
=========================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date
: 28/09/2010
ORAL
ORDER
(Per
: HONOURABLE MS.JUSTICE H.N.DEVANI)
In
this Appeal under Section 260-A of the Income Tax Act, 1961 (the
Act) appellant-Revenue has proposed the following question in
relation to Block Period 1.4.1989 to 7.12.1999:
Whether the
Appellate Tribunal is right in law and on facts in confirming the
order passed by the CIT(A) and thereby deleting the addition of
suppressed sales amounting to Rs.19,61,870/- without
appreciating the result of inquiries and the decisions based on by
the Assessing Officer?
The
respondent-assessee is engaged in the business of ship breaking.
Search action under section 132(1) of the Act had taken place in the
case of Madhupuri Group. During the course of search and the post
search inquiries, on the basis of statement of Shri Mahendra H. Shah
it was found that he was engaged in the activity of issuing
accommodative entries of loans and purchase/sales to various parties
against receipt of cash from them. In the said statement, Shri
Mahendra H. Shah had not specifically stated the name of the
assessee. The Assessing Officer on the basis of the statement of
Shri Mahendra Shah, was of the view that the assessee had also
obtained entries through various concerns of Shri Mahendra Shah and
accordingly initiated proceedings under Section 158BC read with
Section 158BD of the Act in
respect of the assessee. The assessee filed Block return showing
Nil undisclosed income. The Assessing Officer was of the view that
the assessee had not shown the actual sale price realized in the
books of accounts and rejected the books of accounts taking the view
that the assessee had actually sold goods to fictitious parties at a
price which was at least 25% higher than that shown in the bills.
He, accordingly, made addition of Rs.19,61,870/- on account of
suppressed sales. The assessee carried the matter in appeal before
the Commissioner (Appeals) who deleted the additions. Revenue
carried the matter in appeal before the Tribunal but did not
succeed.
Assailing
the impugned order of the Tribunal Mr. M. R. Bhatt, learned senior
advocate appearing on behalf of the appellant-Revenue, reiterated
the reasoning adopted by the Assessing Officer.
As
can be seen from the impugned order of the Tribunal, the Tribunal
has recorded as follows:
On the question
from the Bench whether Shri Mahendra H. Shah in his statement
specifically pointed out about the bogus sales being shown by the
assessee or any evidence was found from during the course of the
search carried out at Madhupuri Group which contains the evidence
regarding the bogus sales, the learned DR was fair enough
to concede that the name of the assessee has not been specifically
mentioned in the statement nor any evidence was found during the
course of the search.
The
Tribunal has, accordingly, recorded that it was an admitted fact
that no material had been found during the course of search that the
assessee had actually realized more sale consideration than that
recorded in the books of accounts. That Shri Mahendra H. Shah had
not specifically mentioned the name of the assessee to prove that
the assessee was engaged in recording any bogus sales. The Tribunal
noted that the Assessing Officer had made the addition merely on the
basis of estimate by taking 15% of the sales made by the assessee to
be the suppressed consideration received by the assessee. The
Tribunal upon verification of the copies of the ledger accounts as
produced before it noted that the sale consideration had not been
received in cash. The sum received by the assessee had duly been
adjusted against the sales and was duly recorded in the regular
books of accounts maintained by the assessee. The Tribunal
accordingly found that the addition in respect of suppressed sales
was made merely on presumptions and assumptions. The Tribunal, was
further of the view that addition could have been made under Chapter
XIV-B of the Act only on the basis of material seized during the
course of search and such other material or information as available
with the Assessing Officer and relatable to such search. The
Tribunal recorded that it was an admitted position that during the
course of search that had taken place in the case of Madhupuri Group
no evidence had been found showing any undisclosed income of the
assessee as defined under Section 158B(b) of the Act. That the sale
consideration was received through cheques and was duly recorded in
the regular books of account. The Tribunal, accordingly held that
regular assessment could not have been substituted by block
assessment and dismissed the appeal preferred by the Revenue.
It
is a well settled legal position, which is also clear from a bare
reading of the relevant provisions that an addition under section
158BD of the Act can be made only in respect of the material
discovered at the time of search or pursuant to any inquiry made in
relation to the search. In the facts of the present case, as is
apparent from the facts noted hereinabove, it is an admitted
position that during the course of search no material had been found
to show any undisclosed income of the assessee. No evidence had been
found to indicate that assessee had realized sale consideration
other than that recorded in its books of accounts. For the purpose
of holding that the assessee had sold goods to fictitious parties at
a price 25% higher than that shown in the bills, the Assessing
Officer had mainly placed reliance upon the statement of Shri
Mahendra H. Shah recorded under Section 132 (4) of the Act. However,
as noted hereinabove, Shri Mahendra H. Shah had not specifically
mentioned the name of assessee. Thus, no material had been found at
the time of search to indicate that the assessee had sold goods at a
price higher than that recorded in the books of accounts regularly
maintained by it. In the circumstances, the Tribunal was justified
in holding that in the facts and circumstances of the case the
provisions of Chapter XIV-B of the Act could not have been resorted
to as block assessment cannot take place of regular assessment.
In
light of the above discussion, it is not possible to state that the
Tribunal has committed any legal error so as to warrant
interference. In the absence of any question of law, much less, a
substantial question of law, the appeal is dismissed.
(D.A.
MEHTA, J.)
(HARSHA
DEVANI, J.)
Pankaj
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