Decided on August 29,1997



M. Srinivasan, C.J. - (1.)THE question referred to this court by the Tribunal reads as follows :
"Whether, on the facts and circumstances of the case, the Appellate Tribunal was justified in upholding the addition of Rs. 1,12,275 on the basis of a 'kacha bill' made by the accountant and admitted to be so by the partner of the firm ?"

(2.)THE assessment year is 1971-72. THE assessee is a forest contractor. A bill showing sale of Rs. 1,12,275 was given to the Income-tax Department. When the said bill was put to one of the partners of the firm, he admitted the same to be a "katcha bill" and also admitted that it was made by an accountant, who was no more with them. It is also admitted that it is only a "pacca bill", which will be entered in the books of account and all the sales will be made to the financiers. THE Income-tax Officer on the basis of those facts made the total addition of Rs. 1,12,275 on account of the said bill.
On appeal, the Commissioner of Income-tax deleted the said amount and observed that it was just a bill not from the bill books and the bill has not been owned as belonging to the firm and the said transaction was also denied by the purchasers.

When the matter came before the Tribunal, the latter reversed the findings of the Commissioner of Income-tax and restored the findings of the Income-tax Officer. The Tribunal referred to the questions put to the partner, Hira Singh, by the Income-tax Officer and the answers given by him, which read as follows :

"I show you this bill in the name of Misri Lal Jagan Nath, Timber Merchants, Dehradun, dated January 11, 1971, of the value of Rs. 1,12,275.01. Could you please tell me whether it is recorded in your books ?"

The answer is that :

"This bill shall not find place in the books as a pacca bill. We issue bills only in the names of the financiers and not in the name of the party who purchased the wood."

(3.)AGAIN, the Income-tax Officer asked him whether the bill issued in the name of Misri Lal Jagan Nath did not find place in the books of account, and what the partner had to say about it. The partner replied that it was only a kacha account, and added that their accountant, Shri Rattan Chand, wrote that bill and that he did not work with the firm any more.
Thus, it is evident from the questions and answers that the transaction was not disowned by the assessee. On the other hand, the assessee accepted the genuineness and truth of the bill and only added that it was a kacha bill and it would not find a place in the regular account. The Commissioner of Income-tax was clearly in error in thinking that it was not a bill from the bill book and, therefore, it could not have been added by the Income-tax Officer.

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