- (1.)THE above mentioned four appeals arise out of the common order dated 2 -6 -2010 pertaining to assessment years 2003 -04 and 2004 -05 passed by the Income Tax Tribunal, Chandigarh Bench, Chandigarh, (hereinafter referred to as the Tribunal).
(2.)ALL the appeals raise identical question and are of a same group. Therefore, for facility of reference, the facts are taken from ITA No. 30 of 2012. The grievance of the appellant in the said appeal, in respect of the assessment year 2003 -04, is in respect of disallowance of Rs. 10,25,000 on the basis of consumption of coal estimated at 2.25% then 2.80% declared by the appellant. In the assessment year 2004 -05, the disallowance has been made in respect of consumables stores and oil/lubricants. The assessee has claimed following substantial questions of law as are arising for consideration by this Court:
WHETHER the ITAT is justified in confirming the disallowance and that too having made on estimate and presumption basis against the well settled law as in the case of CIT v. Smt. Usha Tripathi : (2001) 249 ITR 4 (ALL) wherein the Hon'ble High Court confirmed the provisions of law that no additions or disallowance can be made under Block Period Assessment while computing undisclosed income under section 158BB(1) of the Income Tax Act, 1961, on estimate basis?

Whether the ITAT was justified in confirming the order of authorities below qua making of disallowance @ 1/3rd on estimate and suspicion basis treating claims of expenditure on account of coal and fuel as in -genuine for not being claimed consistently without any evidence to support the additions having found during the course of search which is a basic requirement of computing undisclosed income for the block period as provided under section 158BB(1) of the Income Tax Act, 1961.

3. WHETHER the ITAT was justified in reversing the order of Commissioner (Appeals) as regards disallowance of 1/10th expenditure out of consumable stores, oils and lubricants on estimate basis having rightly deleted by the Commissioner (Appeals) following the provisions of law expressly laid down under section 158BB(1) of the Income Tax Act, 1961 by holding that no material was shown to have been found in the search conducted by the DRI or otherwise which could show that the appellant had claimed excessive or in -genuine expenses under these heads and that the addition is taken to be made on the basis of surmises and conjectures could not be sustained?
4. WHETHER the order of the Tribunal is legally unsustainable and bad in law and perverse to the extent that in cases of Block Period Assessment, no addition as 'undisclosed Income' can be made by the Revenue on estimation basis unless these are evidenced by some incriminating document as found during the search as so held in the case of CIT v. R.M. Patel : (2008) 20 (I) ITCL 447z (Mad -HC): (2008) 298 ITR 274 (Mad).
Whether the order of the Tribunal is legally unsustainable and bad in law and perverse to the extent that the authorities below have clearly deviated from well established Principles of Consistency wherein under similar facts and circumstances the Authorities below had admitted the declared results and in specific the user of coal, fuel, consumables, as declared by the appellant?

5. THAT the order of the Tribunal is legally unsustainable and bad in law and perverse.

(3.)THE learned Commissioner of Income Tax (Appeals) has found that spiral pads were taken in possession by the Department for the period relevant to assessment year 2003 -04 and 2004 -05 during search operations. Such pads disclosed details of cash withdrawn from the bank account of the various coal and fuel suppliers of the appellants. On the basis of such information, the Commissioner of Income Tax (Appeals) found that the expenditure incurred on coal and fuel has been shown as Rs. 52,13,356 against the sales of Rs. 18,09,50,955. In percentage, the expenditure incurred on purchase of coal and fuel comes to 2.80%. The Commissioner of Income Tax (Appeals) found that, in the assessment year 2004 -05, the appellants have shown such expenditure as 1.9% only. Therefore, reduced the amount of disallowance from Rs. 17,37,785 to Rs. 10,25,000.
Learned counsel for the appellant has referred to two judgments rendered in the cases of CIT v. R.M.L. Mehrotra : (2010) 32 (I) ITCL 297 (All -HC) : (2010) 186 Taxman 137 (All) and CIT v. Concorde Capital Management Co. Ltd. : (2009) 29 (I) ITCL 143 (Del -HC) : (2009) 183 Taxman 172 (Del), to contend that while framing the assessment under section 158BB of the Act, the assessment cannot be framed on the basis of estimation.