SUMERCHAND JAIN Vs. COMMISSIONER OF INCOME-TAX

JUDGEMENT

(1.) THIS is a reference under Section 256(1) of the Income -tax Act, 1961 (hereinafter referred to as 'the Act'), by the Income -tax Appellate Tribunal, Jabalpur Bench, Jabalpur (for short 'the Tribunal'), for the opinion of this Court at the instance of the assessee in respect of the following questions: 1. Whether, on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was justified in arriving at the finding, that the purchase of silver vide bill dated October 8, 1985, of M/s. Chouksey Rajnikant and Co., for silver ornaments of 59.547 kgs. amounting to Rs. 1,50,000 which was found recorded in the books of account found at the time of search, was not genuine purchase ?

(2.) WHETHER , on the facts and in the circumstances of the case, the Income -tax Appellate Tribunal was justified in arriving at the finding that the purchase of silver ornaments weighing 38.990 kgs., for Rs. 99,552 vide bill dated October 28, 1985, was not genuine purchase ? 2. The facts which are essential to be stated for the disposal of this reference are that the assessee is a partnership firm. The accounting year relating to the assessment year under consideration was Deepawali of 1984 -85. There was a search and seizure operation under Section 132 of the Act at the business premises of the assessee -firm from October 29, 1985 to November 2, 1985. In the course of such search, on physical verification, stock of silver ornaments weighing 314.63 kgs. was found. At the time of search, trading account was drawn and accordingly closing stock as per the books of account on the date of the search was found to be 268.945 kgs. The search party worked out excess stock of silver ornaments weighing 45.685 kgs. During the Section 132(5) proceedings, the explanation of the assessee to the extent of articles weighing 4.950 kgs. was accepted and the silver ornaments weighing 38.990 were treated as unexplained. In the course of the said assessment proceedings, the Assessing Officer found that there was purchase of 98.437 kgs. of silver ornaments from M/s. Chouksey Rajnikant and Co., Sagar. These purchases were by two bills viz., for 59.447 kgs., dated October 8, 1985, and 38.990 kgs., dated October 28, 1985. The purchase bill dated October 8, 1985, was found recorded in the books of account found at the time of search, while the second purchase bill dated October 28, 1985, was not recorded in such books. In such entire proceeding the purchase of 98.473 kgs. from M/s. Chouksey Rajnikant and Co., Sagar was treated as non -genuine and accordingly the addition of Rs. 2,49,552 was made. On an appeal being preferred the entire addition was deleted by the Commissioner of Income -tax (Appeals). On further appeal being preferred before the Tribunal, it reversed the order of the first appellate authority and upheld that of the Assessing Officer.

(3.) WE have heard Mr. H.S. Shrivastava, learned senior counsel along with Mr. Akshat Shrivastava for the applicant -assessee, and Mr. Rohit Arya, learned senior counsel along with Mr. Sanjay Lal for the respondent -Revenue.