M/S BHATNAGAR OPTICALS V. INCOME TAX OFFICER

ITA/39/2013

AI Insights

The case involves M/s Bhatnagar Opticals, which appealed against the order of the Income Tax Appellate Tribunal, Agra, concerning the assessment year 2009-2010. The appeal was based on several grounds, including the alleged lack of provision in the Income Tax Act that disallows a loss claimed in a return filed after the due date, the right to retract a statement made during a survey, and the claim that the delay in filing the return should be condoned. The tribunal had earlier dismissed the appeals of both the Revenue and the assessee, which led to this appeal in the High Court of Madhya Pradesh. The court found that the issues raised were factual and did not give rise to any substantial question of law.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 761536 (HC-MADHYA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 14-09-2017
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: D P S BHADORIYA; SANTOSH JAIN; ANVESH DONDERIYA
• Assessee Lawyers: KN GUPTA; R S DHAKAD
• Keywords: Assessment Year 2009-2010; Belated return; Retraction of statement; Survey operation; Unexplained Cash
• Section: 143(3); 139(1); 139(4); 133A; 260A

Judgement Text

"1 HIGH COURT OF MADHYA PRADESH BENCH AT GWALIOR I.T.A. No.39/2013 (Income Tax) M/s Bhatnagar Opticals vs. Income Tax Officer, Gwalior -------------------------------------------------------------------------------------- Shri K.N. Gupta Senior Advocate with R.S. Dhakad, Advocate for the appellant. Shri D.P.S. Bhadoriya with Shri Santosh Jain and Shri Anvesh Donderiya, learned counsel for respondent. -------------------------------------------------------------------------------------- CORAM: Hon'ble Shri Justice Sanjay Yadav Hon'ble Shri Justice S.K. Awasthi -------------------------------------------------------------------------------------- Reserved on : 28.08.2017 Date of Decision : 14.09.2017 O R D E R Per Sanjay Yadav, J Present Appeal under Section 260A of the Income Tax Act, 1961 is directed against the order dated 2 22.3.2013 passed by the Income Tax Appellate Tribunal Agra, Bench Agra in I.T.A. No.488/Agra/2013 in relation to the assessment year 2009-2010. 2. The relevant facts briefly are that in a survey carried out in the assessee's premises under Section 133A of the Income Tax Act, 1961 (hereinafter to be referred to as “Act of 1961”), it was found that the assessee firm did not maintain any books of accounts of business, stock register, list of stock was not prepared. Cash of Rs.1,650/- was found. Stock found in the premises was valued at Rs.7,23,819/-. Machinery use for business of sale of spectacles and contact lens and the air conditioner was also valued. Statement of Shri Anurag Bhatnagar proprietor of assessee firm and Shri Kailash Chandra Jain, Accountant of the firm was recorded. The closing balance was shown on the date of survey at Rs.10,35,685/- and as the shortage of cash was not explained addition of Rs.10,34,035/- (1035685- 1650) was made on account of unverified cash. Case was short listed for scrutiny. Return was filed on 3 9.11.2011 disclosing loss of Rs.5,19,316/-. The Assessment Officer, did not accept the return being filed beyond period prescribed under Section 139(1) of the Act of 1961. The assessee in response to the notice retracted his statement of 17.4.2009 which was rejected by the Assessing Officer. For the assessment year 2009- 10 the Assessee had disclosed GP rate of 1.24 percent whereas in the preceding years 2007-08 and 2008-09 he had disclosed GP rate of 17.75 percent and 17.59 percent respectively. The Assessing Officer applying multiplier of 5 against the disclosed sales of the assessee estimated the sales at Rs.60,98,900/- and by applying profit rate of 17.72% made the addition of Rs.10,60,725/-. As the belated return was not accepted the loss declared therein was taken to be nil. 3. The assessment order dated 29.12.2011 was challenged in Appeal under Section 143(3) of the Act of 1961. The Appeal was partly allowed on 06.07.2012. Commissioner Appeals deleted the addition of Rs.10,34,035/- on account of unexplained cash to be 4 not sustainable. The GP (Gross Profit) was held to be Rs.3,40,000/- instead of Rs.10,80,725/-. The Commissioner Appeals, however, upheld disallowing the credit claimed towards loss. 4. That against the order in Appeals, the Revenue as well as to Assessee preferred an Appeal before Income Tax Appellate Authority, Agra. Both these appeals were dismissed on 22.3.2013. Whereagainst assessee has preferred this Appeal on the following proposed substantial question of law: (i) That there is no provision in Chapter VI of the Act of 1961 that if the return to be filed under Section 139 (1) is not filed by due date then the loss shown for the current year in return of income shall not be allowed in the same year. (ii) That the assessee can retract the statement recorded at the time of search even at appellate stage that the income declared by him did not belong to him but to certain other entities. (iii) That the delay having been condoned upto 30.6.2011 further delay of four months could have been condoned. (iv) That the findings are perverse. Though few more questions are proposed; 5 however they were not pressed. 5. Sub-Section (1) of Section 139 of Act of 1961 envisages that every person - (a) being a company or a firm; or (b) being a person other than a company or a firm, if his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax, shall, on or before the due date, furnish a return of his income or the income of such other person during the previous year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed. 6. Sub section (4) of Section 139 of Act of 1961 stipulates that: “(4) Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under sub-section (1) of section 142, may furnish the return for any previous year at any time before the expiry of 6 one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier: Provided that where the return relates to a previous year relevant to the assessment year commencing on the 1st day of April, 1988, or any earlier assessment year, the reference to one year aforesaid shall be construed as a reference to two years from the end of the relevant assessment year.” 7. In the case at hand, the Commissioner Appeal found: “2.2 ... A Survey operation u/s 133A has been carried out at business premises of the appellant firm on 18.12.2008. Accordingly, appellant's case is required to be compulsorily scrutinized for the assessment year under consideration. The appellant is required to file its return on or before 31.7.2009 as per provisions of Sec.139(1) of the I.T.Act. Since no such return has been filed, AO has issued notice under Section 142(1) on 22.09.2010 requiring the appellant to file its return on or before 29.09.2010. Vide letter dated 29.09.2010, the appellant has requested for further time on the ground of non-availability of his CA/AR on 29.09.2010. In the meantime, vide letter dated 12.12.2008, the appellant has requested the AO to supply photocopy of impounded document since they relate to its routine business and it is facing difficulty to provide service to its consumers in their absence. Nowhere this letter mentions that its return cannot be filed in their absence. It is only vide letter dated 28.04.2011 that the appellant 7 has informed the AO of its inability to file its return in absence of photocopy of impounded documents. In response, AO has informed the appellant, vide letter dated 10.06.2011 to take required photocopies on or before 15.06.2011 either personally or through its AR and file return within 15 days therefrom. As per records, the appellant has taken/received desired photocopies on 16.06.2011 as per acknowledgment made on letter dated 22.12.2008. Thereafter vide notice dated 24.06.2011 issued under Section 142(1), the appellant has been asked to produce copy of return filed with enclosures alongwith reply to questionnaire issued earlier on 19.04.2011. The date fixed for compliance is 15.07.2011. In response, neither has anyone attended nor any reply made. Required return has also not been filed till 09.11.2011 for the reasons best known to the appellant. 2.3 From above it is clear that AO himself has condoned the delay in filing of return but only till 30.06.2011 as mentioned in his letter dated 10.06.2011. No request for further condonation has been made by the appellant nor granted by the AO. Thus, AO is found justified in treating the return filed on 09.11.2011, much beyond prescribed as well as allowed time as belated return and not giving credit for loss claimed by the appellant. …” 8. These findings are based on cogent material evidence. If the assessee had not sought condonation for 8 the period from 30.6.2011 to 9.11.2011, he has to blame himself, which does not give rise to any substantial question of law, being pure question of fact. 9. As to retracting of the statement the Commissioner Appeal on the basis of evidence on record found: “3.2. Appellant's submissions alongwith assessment order thus have been considered. Assessment records, statement of the partner(s) alongwith survey folder have also been perused. During the course of survey operations on 18.12.2008, physical stock valuation has been done at Rs.7,24,000/- at various sections of the business premises, as per inventory list. While preparing the same, one of the partner viz. Sh.Anurag Bhatnagar, present at the premises, categorically mentioned and signed at various places as under:- ^^mijksDr LVkWd dk ewY;kadu esjs }kjk crk;s x;s njksa ds vk/kkj ij fd;k x;k gS^^ 3.3 Statement of firm's accountant Sh.Kailash Chand Jain, who has also been cross-examined by the partner, categorically and vehemently mentions the fact of non-maintainance of regular books of accounts by the assessee firm 9 during the year (upto the date of survey) or any of the earlier years. In fact, as per records even the return filed by the appellant firm for earlier year (A.Y.2006-07) also do not contain Trading, Profit and Loss account nor the appellant has produced them before the AO despite there being statutory notices/summons issued to it in this regard. As per his statement recorded during the course of survey, the partner has earlier mentioned that cash book, ledger, sale/purchase bills are maintained and books of accounts are kept with accountant Shri Kailash Chand though no stock register is maintained (Qn./Ans.No.6,7,14). When confronted with accountant's statement regarding non-maintenance of books, the partner has submitted as under :- iz-19 Jh dSyk'kpan tSu] equhe] dk c;ku fy;k x;k ftlesa mUgksaus crk;k fd muds ikl vkidh dksbZ Hkh fdrkcsa] fcYl] okmplZ vkfn ugha gSaA tcfd vkius vius c;ku ds iz'u ua-6 ds mRrj esa dgk gS fd QeZ ds O;olk; ls lEcfU/kr ys[kk iqLrdsa vdkmUVsUV Jh dSyk'kpan tSu ds ikl jgrh gSaA d`i;k crk;sa fd vkius ;g >wBk c;ku fdl dkj.k ls fn;k m- eq>s ftruh tkudkjh Fkh] og eSaus crk nh FkhA iz-20 d`i;k crk;sa fd bl lEcU/k esa mUgksaus >wBk c;ku fn;k gS ;k vki >wBk c;ku ns jgs gSa m- eSaus tks c;ku esa dgk Fkk og xyr FkkA esjs HkkbZ dks bl lEcU/k esa tkudkjh gksxhA 10 iz-21 vki vius HkkbZ ls iwNdj crk,sa fd fdrkcsa rFkk [kjhnh&fcØh] okmplZ dgkW ,oa fdlds ikl gSa m- lp rks ;g gS fd gekjh QeZ ls lEcfU/kr dksbZ Hkh ys[kk iqLrdsa ugha j[kh tkrh gSaA iz- 22 fiNys ikWp o\"kZ ds [kjhnh ,oa fcØh ds fcYl ,oa okmplZ dgkW ij gSa m- miyC/k ugha gSA iz- 23 d`i;k crk;sa fd fiNys ikWp o\"kZ ds [kjhnh ,oa fcØh ds fcYl ,oa okmplZ dgkW ij miyC/k ugha gSa m- [kjhnh ,oa fcØh ds fcYl gekjs ikl ugha gSA^^ Accordingly, voluntary disclosure/surrender of stock of Rs.7,24,000/- has been made by the partner as under :- iz- D;k vki dqN dguk pkgrs gSa m- ugha vHkh eSa dqN Hkh dgus dh fLFkfr esa ugha gwWA dy vius HkkbZ ls ppkZ djus ds mijkar crykÅ¡xkA mijksDr c;ku lksp&le>dj iw.kZ gks'kksgokl esa fcuk fdlh ncko ds fn;kA c;ku dks i<+dj] lksp le>k ,oa bls lR; ikdj vius gLrk{kj fd,A^^ 3.4 Thereafter, the same partner viz. Sh.Anurag Bhatnagar has appeared before the AO on 19.12.08 alongwith his AR and submitted Power of Attorney in his favour. Thus, the appellant's contention that statement has been given under coercion is not borne out from records. Retraction has been done after a gap of about 4 months from date of survey vide letter dated 17.04.2009 sent by dak. The appellant has not given any documentary evidence whatsoever at any stage of the 11 proceedings either assessment or appeal-in support of valuation of closing stock declared by it in its return at Rs.12,19,780/- (as on 31.03.2009) and at Rs.15,09,217/- (as on 18.12.2008 i.e. date of survey). No bills/details of any kind been submitted in support of its submissions that during the course of inventory valuation of date of survey, certain items were left out. In fact, nowhere appellant has challenged the physical valuation at his specified rates, not even in his retracted letter dated 17.04.2009 nor this plea taken. The appellant is found to be in possession of stock as per physical inventory made, for which no explanation with documentary evidence been given and the addition is found to have been made not merely on the basis of statement alone of one of the authorized partners of the firm. 3.5 On the basis of above and keeping in view the fact that no books of accounts found either from premises or from accountant nor produced till 14.12.2011 i.e. at the fag end of the period for completion of assessment proceedings, addition of Rs.7,24,000/- is hereby, confirmed.” 12 10. When these findings are tested on the anvil of the facts on record, the same are not found to be perverse as would give rise to question of law to be entertained in an appeal under Section 260A of the 1961 Act. 11. Having thus considered, we do not find any substantial question of law which arises for consideration in present Appeal. 12. Consequently, Appeal fails and is dismissed. (SANJAY YADAV) (S.K.AWASTHI) JUDGE JUDGE "