IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 8TH SEPTEMBER 2010 / 17TH BHADRA 1932 ITA.No. 1133 of 2009 () ---------------------- ( ITA.1100/COCH/2005 of INCOME TAX APPELLATE, TRIBUNAL, COCHIN BENCH DT.18.6.2008 – ASSESSMENT YEAR 1996-97) .................... APPELLANT/APPELLANT ----------------------------------- THE COMMISSIOENR OF INCOME TAX, COCHIN BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT (S): --------------- PREMIER STEELS, JEWS STREET, ERNAKULAM. R1 BY ADVS. SRI.K.SRIKUMAR SRI.K.MANOJ CHANDRAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 08/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: VK C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. ------------------------------------------- I.T. Appeal No.1133 of 2009 ------------------------------------------- Dated this the 8th September, 2010 JUDGMENT Ramachandran Nair, J. The question raised in the department appeal is whether the Tribunal was justified in confirming the cancellation of the addition of Rs.60 lakhs in the assessment of the respondent - assessee. 2. We have heard the Standing Counsel for the appellant and Adv.K.Srikumar appearing for the respondent. The department has a case that the assessee inflated sales in the cash book which is substantially at variance with the sales register, in as much as the difference in cash received is Rs.10 lakhs each on six occasions. Sixty lakhs rupees was deposited by the assessee in the bank account. The Assessing Officer found that the figures shown as received in the cash book are not reflected in the corresponding sales register and therefore, the amount of Rs.60 lakhs was stated as I.T.Appeal No.1133/2008 2 unaccounted cash introduced as business income. However, the First Appellate Authority as well as the Tribunal accepted the explanation that emergency cash sales are made for deposit in bank to make payments to suppliers like SAIL. The contention of the standing counsel is that the First Appellate Authority as well as the Tribunal accepted the explanation without any material to prove the same. Before us, the counsel appearing for the respondent produced documents showing stock movements and sales made along with the sales tax assessment. 3. After hearing both sides and after going through the documents produced, we feel orders were passed by the First Appellate Authority as well as the Tribunal without verifying the records, but by merely accepting the assessee's explanation. If the department's case that the sales register contains the entire details of quantity and the value for sales made, necessarily, the cash accounted in the cash register should show the full amount received. I.T.Appeal No.1133/2008 3 The Standing Counsel appearing for the department produced copies of the extracts of accounts taken which show corrections in the first two figures. The counsel appearing for the respondent-assessee refuted the allegations and contended that the corrections were not made to introduce any black money in business. Since the Tribunal has not verified the stock register or the stock movement documents to ascertain whether the assessee had the physical stock as on the dates of the alleged cash sales of Rs.60 lakhs, Rs.10 lakhs each of 6 days, we feel the matter requires detailed consideration at the hands of the Assessing Officer himself. We, therefore, allow the appeal by setting aside the orders of the Tribunal and the First Appellate Authority and remand back the matter to the Assessing Officer for the assessee to establish the claim of stock availability, cash sales, payment received, monthly returns filed and payment of sales tax with related documents. If the assessee proves the transactions before the Assessing Officer, that stocks were available for I.T.Appeal No.1133/2008 4 making the cash sales and that there were cash sales over and above the cash sales found by the department in the sales register, then the Assessing Officer delete the addition or otherwise sustain the addition. C.N.RAMACHANDRAN NAIR JUDGE K.SURENDRA MOHAN JUDGE css/