- (1.) THIS appeal under Section 260 -A of the Income Tax Act, 1961 (hereinafter referred to as the Act) arises out of order (Annexure P -3) dated 4.11.1999 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as, the Tribunal) in ITA No.914(ASR)/1993 pertaining to the assessment year 1988 -89.
(2.) THE assessee, manufacturer of Dhodha, Patisa and other sweets had filed its return of income for the assessment year 1988 -89 on 29.7.1988 declaring an income of Rs.61,600/ -. Dhodha is a renowned sweet. It is liked by many. As mentioned on the packing boxes of Dhodha sweet of the assessee, the assessee is a gold medalist in the manufacturing of Dhodha. The assessee, thus, is a leading manufacturer of this sweet whereas it manufactures other sweets as well.
(3.) DURING examination of books of accounts by the Assessing Officer (hereinafter referred to as the AO), it was found by him that the assessee was not issuing cash memoes to the customers qua the sales effected by it. The assessee also admitted that cash memoes were being issued to the purchasers only on demand. On examination of books of accounts, it was found by the AO that the assessee had been supplying finished goods to S/Shri Radhey Shyam, Palji @ Palu Ram and Vijay Kumar. During the course of assessment, their statements were recorded on 22.6.1989 by Inspector of the Income Tax Department; he submitted his report on 29.6.1989. It was found that total value of the goods received from these three parties was to the tune of Rs.3,26,000/ - whereas the total sale shown by the assessee to them was to the tune of Rs.7,24,604/ -. When report prepared by the tax officials was sent to the assessee, the assessee desired to cross -examine the said purchasers. Those witnesses were called after issuing notices to them under Section 131 of the Act. When after cross -examination of the witnesses, large scale discrepancies were found in the accounts, the assessee was called upon to produce cash memoes which were issued by him to various customers for a particular period i.e. from 1.4.1987 to 31.3.1988. Cash memoes produced by the assessee were only from 18.10.1987 to 31.3.1988; these revealed that even serial number of cash memoes had not been printed on the bills and the bills used to be filled in by hand, whenever it was felt necessary to issue such bills. It was found by the revenue that on many days, there was not even single cash memo which was issued, showing the sale.;