Bombay High Court
Commissioner Of Income-Tax vs C.J. Shah And Co. on 14 February, 2000
Equivalent citations: [2000]246ITR671(BOM)
Bench: S.H. Kapadia, A.P. Shah
JUDGMENT
1. Search and seizure action was taken under Section 132 of the Income-tax Act, 1961, pursuant to which loose sheets of paper came to be detected in the form of A3, A4 and A6. The Assessing Officer found that the said loose sheets indicated undisclosed sales for three months from September 3, 1996, to December 4, 1996, and on that basis he estimated undisclosed profit of Rs. 3.40 crores.
2. Being aggrieved, the assessee preferred an appeal to the Tribunal. On facts, the Tribunal found that the Assessing Officer had estimated the turnover on a notional basis for the entire block period. The Tribunal found that according to the assessee the peak investment was of Rs. 40,14,806 which was never disputed by the departmental representative. The said peak investment was worked out on the basis of A3, A4 and A6. The figures mentioned in A5, A4 and A6 were only incoming and outgoing cash transactions and, therefore, the Tribunal came to the conclusion that on the basis of the said three files the addition of Rs. 3.40 crores was arbitrary. The Tribunal found that there was no material to show the turnover during the block period. In the circumstance, the Tribunal allowed the appeal. Being aggrieved, the Department has now come in appeal before this court.
3. It is well settled that in cases where material is detected after search and seizure operations are carried out, the Assessing Officer is required to determine the undisclosed income. In such cases additions are generally based on estimates. In matters of estimation some amount of latitude is required to be shown to the Assessing Officer particularly when relevant documents are not forthcoming. However, it does not mean that the Assessing Officer can arrive at any figure without any basis by adopting an arbitrary method of calculation. In the present matter, A3, A4 and A6 nowhere records the turnover of the assessee as found by the Tribunal and yet on the wrong basis of the incoming and outgoing cash transactions, the Assessing Officer has arrived at the turnover. Moreover, the peak investment was Rs. 40,14,806 for three months. However, there is no material seized to justify any figure to be included for a period earlier to the said period of three months. In the circumstances, the Tribunal has recorded a finding of fact and has held that the addition of Rs. 3.40 crores was totally unjustified. The entire finding of the Tribunal is based on the facts. No substantial question of law arises. Hence, the appeal is dismissed.