COMMISSIONER OF INCOME TAX Vs. LAXMI AGARBATTI FACTORY

JUDGEMENT

(1.) The appeal has been preferred by the department aggrieved by order dated 18-11-2002 passed by Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal) in Appeal Nos. 357/1998 and 398/1998 relating to assessment year 1995-96.

(2.) The facts in short giving rise to this appeal are that the Assessee M/s Laxmi Agarbatti Factory, Sagar is engaged in the business of manufacturing incense sticks. Return of income was filed for the assessment year in question on 31-12-1995 showing total income of Rs. 6,47,211. Return was processed under Section 143(1)(a) of the Income Tax Act on 22-2-1996. Survey under Section 133A of the Income Tax Act was conducted in the business premises on 3-10-1994. During the course of survey, a trading account was prepared on the basis of which stock as per books of account was found amounting to Rs. 20,61,886 whereas the stock on the date of survey was worked out to Rs. 40,90,083. There was excess stock of Rs. 20,28,197. During the course of assessment proceedings, assessing officer accepted the book results taking into consideration such type of stock, which was with the Assessee, though bills were not entered in the books of account. Certain bills amounting to Rs. 1,59,755 were also not found during the course of survey proceedings.

(3.) The assessing officer has added an amount of Rs. 9,16,844 as unrecorded. Being aggrieved by the same, Assessee preferred an appeal before Commissioner (Appeals) (hereinafter referred to as the Commissioner (Appeals)). The Commissioner (Appeals) has reduced unrecorded sales from Rs. 9,16,844 to Rs. 7,07,079 on the ground that the bills related to composite amount of purchase were available at the time of survey, thus there was no question of making additions in this behalf, therefore, assessing officer was not justified in rejecting those purchases. The Commissioner (Appeals) passed order (A-2) confirming the sale to the extent of Rs. 1,59,755.