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The Tax Publishers2004 TaxPub(DT) 0974 (Del-HC) : (2004) 269 ITR 0140 : (2004) 190 CTR 0259 : (2004) 136 TAXMAN 0075 CIT v. Bharat Enterprises INCOME TAX ACT, 1961 Income from undisclosed sources- Addition under section 69-Unaccounted investments-Unsufficient evidences against assessee Assessee-firm was carrying on the business of purchase and sale of copper wire and motor stampings. It purchased the goods in Delhi then transported to Coimbatore and sold there. Search and seizure operations were carried out at the business and residential premises of assessee-firm and its partners both at Delhi and Coimbatore revealed that some of the goods transported to Coimbatore had been sold but the sale proceeds were not accounted for in the books of account, unaccounted money received on such sales was remitted to Delhi in the form of bank drafts drawn in favour of certain parties in Delhi and some part of goods despatched to Coimbatore through transporter, was not accounted for in the books of account. Assessee was required to reconcile those discrepancies. AO added the difference between the goods despatched as per books of the transporter and as declared by assessee to the returned income of assessee as undisclosed investment, due to his non-satisfaction with the explanation furnished by assessee. CIT (A) as well as Tribunal deleted the addition. *Held:On a detailed analysis of the entire evidence relied upon by AO, CIT (A) had concluded that the additions could not be sustained for want of sufficient evidence against assessee. It might be true that while affirming the view taken by CIT (A), Tribunal had not specifically referred to the evidence on record but a reading of its order in its entirety showed that Tribunal was aware of the issues involved. Tribunal had expressed its agreement with the finding recorded by CIT (A) that the statements of some of the persons had given rise to a doubt about the correctness of the accounts of assessee, but in view of apparent contradictions in those statements vis-a-vis their cross-examination, they were not sufficient to call for rejection of accounts of assessee. Tribunal had also found substance in the observations of CIT (A) that there was no logic in conducting sales outside the books of account in such a round about manner as alleged by AO, when it would have been much easier for assessee to go ahead with the sales and pocket the money at Coimbatore. No application of any principle of law was involved in this case. That being the position, the impugned order did not give rise to any substantial question of law. Income Tax Act, 1961* Section 69 Case Law Analysis:Referred:Santosh Hazari v. Purushottam Tiwari [2001] 251 ITR 84 (SC) [Para 10], Sir Chunilal V. Mehta & Sons Ltd. v. Century Spg. & Mfg. Co. Ltd. AIR 1962 SC 1314 [Para 10] and Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28 (SC) [Para 10]. Decision: In favour of Assessee. CIT v. Bharat Enterprises SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2004 TaxPub(DT) 0974 (Del-HC) : (2004) 269 ITR 0140 : (2004) 190 CTR 0259 : (2004) 136 TAXMAN 0075

CIT v. Bharat Enterprises

INCOME TAX ACT, 1961

Income from undisclosed sources- Addition under section 69-Unaccounted investments-Unsufficient evidences against assessee

Assessee-firm was carrying on the business of purchase and sale of copper wire and motor stampings. It purchased the goods in Delhi then transported to Coimbatore and sold there. Search and seizure operations were carried out at the business and residential premises of assessee-firm and its partners both at Delhi and Coimbatore revealed that some of the goods transported to Coimbatore had been sold but the sale proceeds were not accounted for in the books of account, unaccounted money received on such sales was remitted to Delhi in the form of bank drafts drawn in favour of certain parties in Delhi and some part of goods despatched to Coimbatore through transporter, was not accounted for in the books of account. Assessee was required to reconcile those discrepancies. AO added the difference between the goods despatched as per books of the transporter and as declared by assessee to the returned income of assessee as undisclosed investment, due to his non-satisfaction with the explanation furnished by assessee. CIT (A) as well as Tribunal deleted the addition. Held:On a detailed analysis of the entire evidence relied upon by AO, CIT (A) had concluded that the additions could not be sustained for want of sufficient evidence against assessee. It might be true that while affirming the view taken by CIT (A), Tribunal had not specifically referred to the evidence on record but a reading of its order in its entirety showed that Tribunal was aware of the issues involved. Tribunal had expressed its agreement with the finding recorded by CIT (A) that the statements of some of the persons had given rise to a doubt about the correctness of the accounts of assessee, but in view of apparent contradictions in those statements vis-a-vis their cross-examination, they were not sufficient to call for rejection of accounts of assessee. Tribunal had also found substance in the observations of CIT (A) that there was no logic in conducting sales outside the books of account in such a round about manner as alleged by AO, when it would have been much easier for assessee to go ahead with the sales and pocket the money at Coimbatore. No application of any principle of law was involved in this case. That being the position, the impugned order did not give rise to any substantial question of law.

Income Tax Act, 1961 Section 69

Case Law Analysis:Referred:Santosh Hazari v. Purushottam Tiwari [2001] 251 ITR 84 (SC) [Para 10], Sir Chunilal V. Mehta & Sons Ltd. v. Century Spg. & Mfg. Co. Ltd. AIR 1962 SC 1314 [Para 10] and Sree Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28 (SC) [Para 10].

Decision: In favour of Assessee.

CIT v. Bharat Enterprises