Best Steel Traders V. The Deputy Commissioner of Income Tax, Central Circle-2

WP(C)/31707/2022

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Best Steel Traders, a partnership firm, filed a writ petition against the Deputy Commissioner of Income Tax, challenging an assessment order that included Rs. 92,00,824 as undisclosed sales. This amount was linked to unaccounted cash transactions discovered during a survey at the firm's premises following a related search at Olive Builders Group. The petitioner argued that the Excel sheet containing details of the cash receipt was not presented for explanation during the assessment. However, the court noted that the petitioner had been given multiple opportunities to explain the receipts and had provided vague responses. The court dismissed the writ petition, emphasizing that the petitioner could seek redress before the Appellate Authority.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 797323 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 30-11-2023
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH; P K MENON; NAVANEETH NATH; SUSIE VARGHESE
• Assessee Lawyers: ANIL NAIR; TELMA RAJU; P K EDATHARA; VINEETA KRISHNAN; A ANJANA
• Keywords: Assessment Order; Income Tax; Natural Justice; Scrutiny; Unaccounted Cash Payments
• Section: 142(1); 133A; 132A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT THE HONOURABLE MR. JUSTICE DINESH KUMAR SINGH THURSDAY, THE 30TH DAY OF NOVEMBER 2023/9TH AGRAHAYANA, 1945 WP(C) NO. 31707 OF 2022 PETITIONER: BEST STEEL TRADERS, 7-228, K M SQUARE, PALACHUVADU KAKKANAD COCHIN, REPRESENTED BY ITS MANAGING PARTNER SHIJU.V.S, PIN – 682030 BY ADVS. ANIL D. NAIR TELMA RAJU P.K.BIJU EDATHARA VINEETA KRISHNAN A.ANJANA RESPONDENT: THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-2, M.G. ROAD, KOCHI, PIN – 682011 BY ADVS.JOSE JOSEPH, SC, INCOME TAX DEPARTMENT, KERALA SRI. P.K.RAVINDRANATHA MENON (SR.) SRI. NAVANEETH.N.NATH SRI. SUSIE B VARGHESE(K/1300/2019), STANDING COUNSEL THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 30.11.2023, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P .(C.) No.31707/2022 2 JUDGMENT Heard Smt.Telma Raju, the learned counsel for the petitioner and Smt. Susie B. Varghese, Senior Standing Counsel for the Income Tax Department. 2. The present writ petition has been filed by the petitioner assessee impugning Ext.P9 assessment order dated 02.09.2022 in respect of the assessment year 2020-21. The petitioner is a partnership firm. The petitioner assessee filed return of its income dated 15.02.2021 for the assessment year 2020-21. The petitioner assessee's return was selected for scrutiny. A search/survey under Section 132A of the Income Tax Act, 1961 was conducted in the case of Olive Builders Group, Kochi on 16.05.2019. During the search, it was noticed that the said Olive Builders had made unaccounted cash payments to contractors and suppliers. The petitioner firm was the main steel supplier of Olive Builders group. Accordingly, a survey W.P .(C.) No.31707/2022 3 under Section 133A of the Income Tax Act, 1961 was undertaken at the building premises of the petitioner on 30.07.2019. At the time of assessment proceedings, the petitioner had discontinued the steel trading business and got engaged in Battery Lead manufacturing and trading for its sister concern, namely M/s. Best Smelters situated at Kanjikode, Palakkad. 3. There were several unaccounted receipts, including one of Rs. 92,00,827/-, which was received in the bank account of the petitioner and was reflected in the excel sheet recovered with regard to the unaccounted cash transaction from Lead Smelting Business. The learned counsel for the petitioner submits that this excel sheet was not put to the petitioner for explanation and therefore, the petitioner could not explain the said cash receipt of Rs.92,00,824/-. However, in paragraph 6 of the assessment order, it is recorded that the assessee was required to explain this W.P .(C.) No.31707/2022 4 cash receipt of Rs.92,00,824/- vide notice dated 20.01.2022 to which the assessee had given vague reply/explanation. The Assessing Authority finds that there were clear evidence of receipts in cash in the Excel Sheet maintained by the assessee firm, the said amount was taken as undisclosed sales and accordingly, an amount of Rs.92,00,824/- was added to the total income of the petitioner. 4. Considering the said finding recorded regarding the issuance of notice and reply given by the petitioner, I do not find that there is any substance in the submission on the part of the learned counsel for the petitioner, that the said Excel Sheet was not put to the notice of the petitioner for explanation. Be that is it may, the petitioner has a remedy before the Appellate Authority against the assessment order, and this Court in exercise of its jurisdiction under Article 226 of the Constitution of India would not examine the assessment W.P .(C.) No.31707/2022 5 order on merits as this Court does not find that there has been any violation of the principles of natural justice as contended by the learned counsel for the petitioner. Thus, this writ petition is dismissed with liberty to the petitioner to approach the Appellate Authority, if so advised and if the appeal is filed, the same shall be decided in accordance with law. Sd/- DINESH KUMAR SINGH JUDGE DCS/04.12.2023 W.P .(C.) No.31707/2022 6 APPENDIX PETITIONER EXHIBITS EXHIBIT P1 TRUE COPY OF THE NOTICE DATED 6.12.2021 UNDER SEC.142 (1)ISSUED BY THE RESPONDENT. EXHIBIT P2 TRUE COPY OF THE REPLY DATED 9.12.2021 FILED BY THE PETITIONER TO THE RESPONDENT. EXHIBIT P3 TRUE COPY OF THE NOTICE DATED 11.01.2022 UNDER SEC.142 (1)ISSUED BY THE RESPONDENT. EXHIBIT P4 TRUE COPY OF THE REPLY DATED 17.1.2022 FILED BY THE PETITIONER TO THE RESPONDENT. EXHIBIT P5 TRUE COPY OF NOTICE DATED 1.2.2022 UNDER SEC.142 (1)ISSUED BY THE RESPONDENT. EXHIBIT P6 TRUE COPY OF THE REPLY DATED 8.2.2022 FILED BY THE PETITIONER TO THE RESPONDENT. EXHIBIT P7 TRUE COPY OF NOTICE DATED 24.08.2022 UNDER SEC.142 (1) ISSUED BY THE RESPONDENT. EXHIBIT P8 TRUE COPY OF THE REPLY DATED 29.08.2022 FILED BY THE PETITIONER TO THE RESPONDENT. EXHIBIT P9 TRUE COPY OF ORDER DATED 02.09.2022 ISSUED BY THE RESPONDENT. "