RAJHANS PAPER COMPANY, MUMBAI V. ITO -14(2)-3, MUMBAI

ITA 1237/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1396 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Keywords: Unexplained investment; Business income; Principle of natural justice; Retraction
• Section: 143(3); 142(1); 133A; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI . . , , BEFORE SHRI C.N. PRASAD , JM AND SHRI RAJESH KUMAR , AM ITA NO. 1237 / MUM/ 20 1 4 ( / ASSESSMENT YEAR: 20 0 9 - 10 ) M/S RAJHANS PAPER COMPANY, C/O SHIRISH H SHAH AND CO., , MANGROL MANSION, 6, RUSTOM SIDHWA MARG, FORT, MUMBAI - 400001 / VS. INCOME TAX OFFICER. WARD 14(2)(3), MUMBAI. ./ ./ PAN : AAFF8622J ( / APPELLANT) : ( / RESPONDENT ) / APPELLANT BY : NONE /RESPONDENT BY : SHRI SHRIKANT NAMDEO / DATE OF HEARING : 2 7 .12.206 / DATE OF PRONOUNCE MENT : 28. 12. 2016 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 16.12.2013 PASSED BY THE LD.CIT(A) - 25 , MUMBAI FOR THE ASSESSMENT YEAR 20 0 9 - 10 . 2. THE ASSESSEE IN THIS APPEAL RAISED THE ISSUE OF VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF RS.25,95,321/ - UNDER SECTION 69 OF THE ACT. 2 ITA NO. 1237 /MUM/201 4 3. THE PRESENT APPEAL WAS PRESENTED BY THE ASSESSEE ON 24.2.2014. THEREAFTER THE CASE WAS FIXED F OR HEARING ON 11.8.2015 AND ON THAT DATE AT THE REQUEST OF THE ASSESSEE, THE CASE WAS ADJOURNED TO 14.12.2015. DUE TO NON FUNCTIONING OF THE BENCH THE CASE AGAIN WAS ADJOURNED TO 14.8.2016. SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE, THE HEARING WAS ADJ OURNED TO 19.7.2016. ON 19.7.2016, DUE TO NON - FUNCTIONING OF THE BENCH THE APPEAL WAS FIXED FOR HEARING ON 18.10.2016. ON 18.10.2016, NONE APPEARED ON BEHALF OF THE ASSESSEE, THEREFORE, THE HEARING WAS ADJOURNED TO 27.12.2016. ON 27.12.2016 ALSO, AT THE T IME OF HEARING NON - APPEARED ON BEHALF OF THE ASSESSEE, NOR THERE IS ANY APPLICATION FOR ADJOURNMENT FROM THE ASSESSEE. THEREFORE, WE HAVE NO OTHER ALTERNATIVE BUT TO DISPOSE OF THE APPEAL EX - PARTE ON MERIT IN ABSENCE OF THE ASSESSEE AFTER HEARING THE LD DR . 4 . BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCOME ON 30.9.2009 DECLARING A TOTAL INCOME AT RS. 11,54,860/ - . THE RETURN WAS PROCESSED U/S 143(1) AND THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY S TATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. A SURVEY UNDER SECTION 133A OF THE ACT WAS CONDUCTED ON 7.2.2009 ON THE ASSESSEE - FIRM WHEREIN THE PARTNER OF THE ASSESSEE FIRM DISCLOSED AN AMOUNT OF RS.40, 1 0,1 00/ - WAS MADE ON ACCOUNT OF EXCESS STOCKS. HOWEVER LATER ON THE SURRENDER WAS RETRACTED ON 15.4.2009 BY FIL ING REVISED DISCLOSURE IN 3 ITA NO. 1237 /MUM/201 4 RESPECT OF EXCESS UNACCOUNTED STOCK OF RS.18,14,908/ - . THE AO AFTER DISCUSSING THE FACTS AN D CONSIDERING THE CONTENTI ON OF THE ASSESSEE CAME TO THE CONCLUSION THAT THERE WAS EXCESS STOCK OF RS.25,95,321/ - AND ACCORDINGLY ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE UNDER SECTION 69 OF THE ACT, THEREBY MAKING ASSESSMENT AT RS.26,61,230/ - VIDE ASSESSMENT ORDER DAT ED 28.12.2011 PASSED UNDER SECTION 143(3) OF THE ACT. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A) WHO ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AND HOLDING AS UNDER : 4. 7 I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER, SUBMISSIONS OF APPELLANT AND THE FACTS AND CIRCUMSTANCES OF THE CASE. I NOTE THAT IN THE PRESENT APPEAL THAT THE APPELLANT HAS NOT DISPUTED THE FIGURE OF UNACCOUNTED OUT OF THE BOOKS EXCESS STOCK AT RS.25,95,321/ - , AS AGAINST THE FIGU RE OF RS.18,14,908/ - COMPUTED AS PER THEIR EARLIER LETTER DATED 15.04.2009. THEREFORE, THE RETRACTION OF THE BALANCE AMOUNT OF RS.7,80,413/ - DISCUSSED HEREINABOVE IS NOT THE SUBJECT MATTER OF THIS APPEAL. WITHOUT PREJUDICE, I UPHOLD THE ACTION OF AO IN DI SALLOWING THE SAID RETRACTION MADE BY THE APPELLANT FOR REASONS DISCUSSED HEREINABOVE. NOW, THE QUESTION REMAINS AS TO WHETHER THE DISCLOSURE OF UNACCOUNTED OUT OF THE BOOKS STOCK OF RS.25,95,321/ - (I.E. RS.40,1O,100 / - ORIGINALLY DECLARED DURING SURVEY, LESS RS.14,14,779/ - ON ACCOUNT OF RECTIFICATION ON ACCOUNT OF TOTALING ERROR) BE TAXED UNDER THE HEAD 'BUSINESS INCOME' OR 'INCOME FROM OTHER SOURCES'. IN THIS REGARD, I FIND NO INFIRMITY IN THE ACTION OF AO IN BRINGING THE SAID AMOUNT TO TAX UNDER SECTION 69 OF THE ACT. THE APPELLANT IS FOUND TO BE IN POSSESSION OF UNEXPLAINED INVESTMENT IN STOCK; AND HENCE THE PROVISIONS OF SECTION 69 SQUARELY APPLY TO THE CASE. FURTHER, SINCE THE UNACCOUNTED STOCK IS OUT OF THE BOOKS, THE QUESTION OF INCLUDING THE VALU E OF SUCH STOCK FOR CALCULATION OF BOOK PROFITS DOES NOT ARISE. THEREFORE, I FIND NO INFIRMITY IN THE CALCULATION MADE BY AO OF THE BOOK PROFITS OF THE APPELLANT AT RS.1,97,352/ - 4 ITA NO. 1237 /MUM/201 4 AND THE REMUNERATION ALLOWABLE TO PARTNERS U / S 40(B) AT RS. 1 ,31,440 / - BASED THEREON. 4 .8 IN VIEW OF THE ABOVE, THE GROUNDS NO. 1 TO 3 OF APPEAL ARE DISMISSED. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 5. L.D DR STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND PRAYED THA T THE APPEAL FILED BY THE ASSESSEE BE DISMISSED. 6. WE HAVE CAREFULLY CONSIDERED THE CONTENTIONS OF THE LD DR AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW. WE FIND FROM THE RECORD THE LD.CIT(A) HAS CONSIDERED A LL ASPECTS OF MATTER AND PASSED REASONED ORDER CONFIRMING THE ADDITION MADE BY THE AO AFTER TAKING INTO ACCOUNT THE MERITS OF THE CASE . BEFORE US ALSO, NEITHER THE ASSESSEE NOR ANY REPRESENTATIVE ON BEHALF OF THE ASSESSEE AND ALSO THERE ARE NO MATERIALS / EVIDENCES BEFORE US TO ENABLE US TO TAKE A DIFFERENT VIEW THA N THE VIEW SO TAKEN BY THE AUTHORITIES BELOW . UNDER THESE CIRCUMSTANCES WE ARE INCLINED TO AFFIRM THE ORDER PASSED BY THE LD. CIT(A). 7. IN T HE R ESULT, THE APPEAL OF T HE AS S E S SEE IS DISMISSE D . ORDER PRONOUNCED IN THE OPEN COURT ON 28TH DEC,2016 SD SD ( C.N. PRASAD ) ( RAJESH KUMAR) / J UDICIAL MEMBER / A CCOUNTANT MEMBER 5 ITA NO. 1237 /MUM/201 4 MUMBAI ; DATED : 28. 12. 201 6 SRL,SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE AP PELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI