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8. The entire premise of the addition made by the AO which has been confirmed by the ld. CIT (A) rests upon the allegation of the Department that the assessee was causing cigarettes to be sold in the market at a higher than the printed price, by evolving a modus operandi which in the trade circle of cigarettes was termed as "Twin Branding Mechanism". This Twin Branding Mechanism had led to generation of unaccounted money through sale of cigarettes every year which is in the form of premium over and above the printed MRP price. The Revenue further accredited the assessee that it had directly or indirectly benefited itself from the generation of this money. This entire premise is based on searches conducted by DRI (Central Excise) during September 1982 and again in 1986 in the offices of the assessee company and several „wholesale buyers‟ (hereinafter referred as WBs) throughout the Country including certain retail outlets and salesmen etc. From these searches, the AO deduced that the assessee through deceptive packet designs, i.e. "Twin Branding Mechanism" was causing „premium‟ to be generated on certain sought after brands in the market and the WBs all across the country were remitting such „premium‟ by demand drafts purchased in cash in fictitious names and were being deposited in several bank accounts. In the M/s. GTC Industries Ltd., impugned assessment order as many as 24 bank accounts have been referred where the drafts were remitted by the WBs which were unearthed during the course of DRI searches. On sample basis, there has been reference to two bank accounts in Indian Bank, Santa Cruz-West, Mumbai in the name of Mr. H K Patel, Current Account No.1391; and Mr. S.K. Mehta, SB Account No.8953 were investigated by the AO on random basis. Tracing back some credit entries in these accounts, independent survey was carried out by the Assessing Officer on the business premises of WBs at Gorakhpur, Muzaffarpur, Darbhanga and Varanasi. During the survey, statements of certain employees of the WBs were recorded wherein they have admitted to have made remittance by way of demand draft out of cash to the fictitious bank accounts in Mumbai in the account of Mr. H K Patel and Mr. S K Mehta. AO on further scrutiny of these bank accounts found that certain payments were made to advertising agencies for the advertisement of the brand and cigarettes manufactured by the assessee company. There was also one incident of donation made to Methodist Church in India at behest of one Senior Official of the assessee company GTC. In the entire assessment order, the aforesaid evidences/materials have been referred to in detail which shall be discussed by us in brief hereinafter.

12. One of the payments made from the account of H K Patel were for supply of office equipment against the payment to Methodist Church of India. The Church in enquiry had confirmed that these donations were in kind which was through Ms. Nirmala Sundaram, an Officer of Bank of America. In her statement she has stated that she has arranged donations and the drafts were given by one of the key person of GTC. In her statement she had stated that she had contacted, Mr. Deepak Poddar, Executive of the Company, who is capable of taking such decision for this purpose. Since the GTC had a loan and current account with this Bank, therefore, the assessee must have obliged to the employee of M/s. GTC Industries Ltd., the bank by giving donation at her request. AO had further examined other bank account debits of this account which has been discussed in detail in part-B of the Assessment Order. The nature of investigation and outcome was that the payments made for advertisement and publicity were at the instance of assessee and bills were collected and paid by the assessee alone through debits from these fictitious accounts. This shows that assessee had some kind of control over these fictitious bank accounts.

 Some of the recipients of payments have stated that they had received payments from GTC, this shows the role and control of the assessee on these bank accounts.  The control of the bank accounts is also reflected from donation to Methodist Church and payments to various agencies which were made at the behest of GTC.

In the assessment order there is also reference to investment in share capital of M/s. Century Hire Purchase Pvt. Ltd., through these bank accounts. AO had also referred to certain other bank accounts in the name of M/s. A K and Company, M/s. C.K. and Company, M/s. K.K. and Company and M/s. V.K. and Company from where drafts sent by wholesale buyers of the company have been credited to these accounts. He observed that all these bank accounts were catering to a single party, that is, these are accounts of GTC. AO has also incorporated the details of pay orders purchased from these accounts in the name of various parties which are mostly advertisers and printers which have been discussed in detail from pages B-25 to B-33. The conclusion of all such details mentioned by the AO is the same, that is, the assessee had control over the fictitious bank accounts and premium collected from all across the country belonged to the assessee.

32. The allegation against the assessee was that the cigarettes were being sold at higher than the printed price was found to be correct. During the search, statements were recorded in the case of wholesale buyers wherein it was found to be a Pan-India Phenomena that cigarettes were being revalued at higher than the printed price for a given brand. The retailers were supplied cigarettes by the wholesale buyers at the printed price appearing in the invoice of the wholesale dealers and excise price which was M/s. GTC Industries Ltd., collected from the retailers where mopped-up by them. This has been found in the form of statements of same wholesalers, retailers and all the employees of wholesale buyers recorded by the DRI during the search operations conducted all over the country in 1983 and also during the course of survey and statements recorded u/s.131 by the Department. The wholesale buyers had purchased demand drafts (DDs) in cash in round sums of tens of thousands (but below Rs.50,000/-) mostly in the names of individuals and mostly by giving incomplete addresses of the purchasers of the DDs and by giving fictitious names or vague names like A. Kumar, B. Prasad, etc. and payable mostly in Mumbai, Kolkata and Delhi. Proof that the upcountry wholesale buyers of the Company purchased DDs in cash came by comparing handwritings by the Examiner of Questioned Documents, in the DD purchase application forms of such DDs purchased in cash and the DDs purchased by transfer in the name of GTC Industries Ltd., for making payment of outstanding. This aspect was thoroughly investigated with reference to DDs purchased at Muzaffarpur in Bihar and Gorakhpur in UP, where employees of the wholesale buyers admitted to the fact that they had bought the DDs in cash and that the handwriting in the DD purchase application forms was theirs. Mr. Vinod Kumar Kedia, the manager of the wholesale buyer of the assessee at Muzaffarpur has, in fact admitted that the DDs were purchased from "on money" generated from the sale of cigarettes. In the case of the wholesale buyer at Varanasi, DDs in cash were purchased by the employees of the wholesale buyer of the assessee by giving their actual names and their residential addresses. The Central Excise authorities had independently conducted a search on the wholesale buyer of the assessee at Trivandrum. During the course of that search, Mr. B Pandian, the Manager of the wholesale buyer M/s. GTC Industries Ltd., admitted that his firm was charging "on money" on sale of cigarettes and that the on money so collected was converted into DDs and remitted to Bombay, Delhi, Sikkim and other places. Investigations conducted by the then Income Tax, Central Circle-II (IX), Bombay, led to identification of DDs admittedly purchased out of "on-money" generated at Trivandrum, being credited into accounts at Bombay. When the accounts to which the DDs, purchased in cash and remitted by the upcountry wholesale distributors, were investigated by learned Assessing Officer, it was found that the accounts stood with fictitious addresses. It was further found that the person operating the account had also operated the account by assuming a fictitious name. In Bombay alone, more than 100 such bank accounts were unearthed. The credit side of all such accounts was made up of DDs deposited for clearing which were coming from all over the country including Gorakhpur, Varanasi, Kanpur, Surat, Baroda, Trivandrum, Guntur, Vijayawada etc., whereas in most cases the debit side showed almost 100% cash withdrawals from most of the accounts. It was not physically possible to investigate all such accounts because of sheer volume. The fact of on-money being sent to fictitious bank account was common to all such places where GTC had a wholesale buyer. On sample basis, learned Assessing Officer selected three places for survey to find out the identity of the remitter of the drafts, namely, Gorakhpur, Varanasi and Muzaffarpur. It was found that there were about six accounts where there were transfer debits in addition to cash withdrawals. In the six accounts where there were transfer debits [one such account being the account standing in the name of H K Patel in Indian Bank. Santa Cruz (W)], it was found that the transfer entries were for purchase of banker‟s cheques, Pay Orders. Over 100 such Pay orders were purchased through debits from the M/s. GTC Industries Ltd., accounts. Except for three Pay Orders, all the remaining Pay Orders were payable to reputed advertisement agencies. When the reputed advertising agencies were contacted to gather information regarding who gave them the Pay Orders and for what purpose, all the advertising agencies confirmed that these were for advertisement work carried out by them for GTC products and the job orders were given to them by Shri Rajiv Ohri, the Advertising manager of GTC. Only at the time of billing, the advertising agencies were asked to make the bill in third party names and the Pay Orders were received against such billings. As far as the remaining three Pay Orders were concerned, these aggregated to Rs.64,000/- (approximately) and were in the names of suppliers of office equipments. The office equipments were supplied to the Methodist Church of India by three vendors. When the Methodist Church of India was contacted to know how they could make payment for the purchase of office equipments through three Pay Orders, they informed that they had their account with the Bank of America, Nariman Point, Mumbai. They had requested the Officer of the Bank of America, handling their account, Mrs. Nirmala Sundaram, to contact some prosperous clients of theirs for a donation so that they could buy the office equipments. Mrs. Nirmala Sundaram will be able to tell as to who gave the Pay Orders. The statement of Mrs. Nirmala Sundaram was recorded u/s. l31 of the Act, in which she stated that she had contacted Mr. Deepak Poddar, the then President-cum-Managing Director of GTC for the donation. Subsequently, on the directions of the Hon'ble ITAT for the A.Y. 1984-1985, GTC was given the opportunity of cross examination of Mrs. Nirmala Sundaram, wherein she confirmed whatever she had stated in her original statement.