S.K.BODAPPA CHETTIAR Vs. JOINT COMMISSIONER

JUDGEMENT

(1.) The assessee is on appeal as against the order of the Joint Commissioner relating to assessment year 1994-95. The assessee is a dealer in pulses and grams. The place of business as well as the residence of the assessee was inspected by Enforcement Officials Wing on 20.3.1995 which revealed that daily cash balance and the totals have been struck in pencil instead of in ink; no separate sale bills for taxable, non taxable and commission sales have been maintained and no separate stock of goods in the shop for taxable, non taxable and commission goods have been kept and maintained. Inspection further revealed that there was stock variation in Toor Dhall, Chillies and tamarind. The inspection also resulted in the recovery of certain photocopies of the sale bills which contained the name of the Kerala dealer as vendor and purchaser in Andhra Pradesh. The assessee explained that these photocopies of the sale bills are merely jotting papers and that the transactions noted therein related to Arecanut, with which the assessee had nothing to do. Rejecting the assessee's contention, the Assessing Officer estimated the turnover by adding four times on the actual suppression towards the probable omission and levied penalty under Section 12(3)(b) of the Income Tax Act. Aggrieved by the assessment, the assessee went on appeal before the first Appellate Authority, who agreed with the assessee's contention that the photocopies of the bills could not be taken as related to the assessee's business. The Appellate Authority found that they were rough jotting papers and the department should have taken further investigation on this. In the absence of any such exercise done, the assessment made was liable to be set aside. As regards the stock variation, the Appellate Assistant Commissioner pointed out that they related to deficit stock of chillies and tamarind and excess stock of dhall. The deficit stock of chillies relate to second sale item. As evident from the verification, the stock variation statement filed in the assessment records showed that the assessee however did not deal with tamarind. However, the assessee make a statement before the Enforcement Wing Officials that they have effecting purchases of tamarind from registered dealers within the state. Thus, the Appellate Authority fixed the turnover on actual suppression at Rs.7145/- and deleted the four times addition and adopted one time addition.

(2.) The first Appellate Authority correspondingly reduced the penalty levied under Section 12(3)(b) of the Act. Finding the order of the First Appellate Authority prejudice to the interest of the Revenue, the Joint Commissioner invoked suo moto proceedings to restore the order of assessment. In the said proceedings, the Revenue viewed that in respect of recovery of photocopies, the assessee had not let in any evidence that the slips did not belong to the assessee. On the other hand, the assessee shifted the burden to the Revenue and the Appellate Assistant Commissioner had wrongly accepted the stand of the assessee to grant the relief.

(3.) On verification of the D7 records, the Joint Commissioner pointed out that the invoices were not mere rough papers purchased from the hawkers for calculation purposes. The Joint Commissioner pointed out that when the slips relating to sales made by Kerala dealers to Vellore dealers were taken up for verification, it was found that they were properly accounted for by the Vellore dealers in their accounts. It was further pointed out that the bills which carried the name of Andhra Pradesh dealers contained the name of the purchaser with full address at Chittoor but Care of Vellore exchange. In the background of the facts, the Joint Commissioner held that it could not be said that the Officer had proceeded with the assessment on mere presumption and without any materials. Taking into account these facts, the Joint Commissioner held that there was a nexus between the jotting in the slips and the assessee's business warranting restoration of the assessment. However, on the estimated addition, the Joint Commissioner restricted the same to equal time addition on the actual suppression. Levy of penalty to that extent was also modified. Aggrieved by the same, the assessee is on appeal before this Court.