Decided on June 29,1994



S. Bandyopadhyay, Accountant Member - (1.) THIS appeal has been filed by the assessee against the order of the CIT(A).
(2.) The facts of the case are that the assessee filed a return of income on 30-6-1977 declaring the total income at Rs. 1,52,12,656. This was revised on 18-1-1978 and a total loss of Rs. 2,85,77,361 was declared in the revised return. The Assessing Officer completed the assessment on 6-9-1980 by determining the total income at Rs. 1,80,63,239. The assessee-company is engaged in the business of mining iron ore and exporting the same to different countries and mainly Japan. The closing stock of the assessee as shown in the original return of income was revised slightly in the revised return. The following items at the values shown below were shown in the closing stock in the said revised return: JUDGEMENT_7300_TLIT0_19940.htm
(3.) A search and seizure operation was conducted by the Department in the premises of the assessee-company during the period from 20-12-1980 and 22-12-1980. During the said operations, an unsigned paper, pur-ported to be showing the valuation of closing stock as on 30-9-1976 was found in the file of the Accountant dealing with the matter relating to determination of the closing stock, along with other papers. It may be mentioned in this connection that the previous year of the assessee for this year also ended on 30-9-1976 and hence, the closing stock as referred to above means the stock as on that date. 4.1 In the above-mentioned paper, found during the search and seized by the Department, the position of the stock as on 30-9-1976 was shown as below: JUDGEMENT_7300_TLIT0_19941.htm 4.2 On the basis of the increased valuation of stock as shown in the abovementioned seized paper, the Department initiated proceedings under Section 147 to assess the escaped income. It is an undisputed fact that the proceeding was in fact started by the Department under Section 147(a) of the Act and not under Section 147(b). Representative of the assessee came up with various arguments against adoption of the figure of closing stock as per the seized paper, to which we shall refer to in due course. The Assessing Officer, however, ultimately did not accept the contentions of the assessee and finally completed the assessment by making additions on the different items of stock in accordance with the difference between the figures as shown in the seized paper and as disclosed in the return. Thus, not only the entire values of the chips and VMS Lumpy at the Mechanical Plot as shown in the seized paper were taken into consideration and added back, but also the valuations of Lumpy Ore and Blue Dust were also made in accordance with the rates shown in the seized paper. In all, therefore, the Assessing Officer made a total addition of Rs. 70,09,570 towards the value of the closing stock in the reassessment order. His action was upheld by the CIT(A).;

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