M/s Padma Priya Cements, Srikakulam V. The DCIT, Central Circle, Visakhapatnam

ITSSA 17/VIZ/2002

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8773 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-10-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-09-2010
• Assessment Year: misc
• Appeal Filed On: 13-03-2002
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Keywords: Business income; Loose papers
• Section: 131; 132; 2

Judgement Text

IT(SS)A NO.17/VIZAG/2002 PADMAPRIYA CEMENTS,SRIKAKULAM PAGE 1 OF 3 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER IT(SS)A NO.17/VIZAG/2002 ASSESSMENT YEAR: BLOCK PERIOD 1.4.88 TO 3.9.98 M/S. PADMA PRIYA CEMENTS SRIKAKULAM VS. DCIT, CENTRAL CIRCLE VISAKHAPATNAM (APPELLANT) GIR NO.P-308 (RESPONDENT) APPELLANT BY: SHRI G.V.N. HARI, CA RESPONDENT BY: SHRI G.S.S. GOPINATH, DR ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 08.1.2002 PASSED BY LD. CIT(A)-I, HYDERABAD AND IT RELATES TO THE BLOCK PERIOD FROM 1.4.1988 TO 03-9-1998. THE SOLE ISSUE URGED IN THIS APPEAL IS REGARDING THE VALIDITY OF ADDITION OF RS.4,05,000/- RELATING TO THE UNACCOUNTED SALES. 2. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE MANUFACTURE AND SAL E OF CEMENT. THE COMMERCIAL PRODUCTION WAS STARTED IN SEPTEMBER, 199 7 AND WAS STOPPED FOR ABOUT 4 TO 5 MONTHS DUE TO CERTAIN TECHNICAL RE ASONS AND THEREAFTER IT WAS RESTARTED AGAIN. THE REVENUE CARRIED OUT SEARC H AND SEIZURE OPERATIONS UNDER SECTION 132 OF THE ACT ON 03-9-1998 IN THE BU SINESS PREMISES OF THE ASSESSEE. DURING THE COURSE OF SEARCH, CERTAIN LOO SE PAPERS WERE SEIZED AND FROM THE CONTENTS OF THE LOOSE PAPERS, IT WAS N OTICED THAT THE ASSESSEE WAS NOT ACCOUNTING CERTAIN PORTION OF SALE OF CEMEN T. THE TOTAL SALES MENTIONED IN THE LOOSE SLIPS WERE 6291 BAGS OF CEME NT OUT OF WHICH 2432 BAGS WERE SOLD WITHOUT BILLS. THE ASSESSING OFFICE R RECORDED A STATEMENT IT(SS)A NO.17/VIZAG/2002 PADMAPRIYA CEMENTS,SRIKAKULAM PAGE 2 OF 3 UNDER SECTION 131 OF THE ACT ON 16.10.1998 FROM THE PARTNER OF THE FIRM SHRI KORADA PRASADA RAO AND CONFRONTED THESE LOOSE SLIPS TO HIM. IN REPLY, HE STATED THAT ABOUT 4500 BAGS OF CEMENT WERE SOLD WITHOUT BILLS FROM SEPTEMBER 1997 TO THE DATE OF SEARCH AND VALUE THER E OF WAS DECLARED AT RS.4,05,000/-. HE FURTHER STATED IN THE REPLY THAT THE EXPENDITURE ON RAW MATERIALS HAVE ALREADY BEEN RECORDED IN THE BOOKS. HOWEVER, WHILE FILING THE BLOCK RETURN, THE ASSESSEE DID NOT DISCLOSE ANY UNDISCLOSED INCOME. PLACING RELIANCE ON THE SWORN STATEMENT, THE AO TRE ATED THE ABOVE SAID SUM OF RS.4,05,000/- AS THE UNDISCLOSED INCOME OF THE A SSESSEE. THE LEARNED CIT(A) ALSO CONFIRMED THE SAID ADDITION. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. WE NOTICE THAT BOTH THE TAX AUTHORITIES HAVE PLACED RELIANCE ON THE SWORN STATEMENT TO CONFIRM THE SAID ADDITION. THOUGH THE IMPUGNED LOOSE SLIPS SUGGEST UNACCOUNTED SALES TO THE TUNE OF 2432 BAGS, THE ASSESSING OFFICER HAS ADDED THE VALUE OF 4500 BAGS BY PLACING RELIANC E ON THE SWORN STATEMENT. HOWEVER, THE CONTENTION OF THE ASSESSE E IS THAT THE DUE DATE FOR FILING THE RETURN OF INCOME HAD NOT EXPIRED ON THE DATE OF SEARCH AND HENCE IT HAD PREPARED THE BOOKS OF ACCOUNT BY INCLU DING THE SAID SALES AND THE SAME HAS RESULTED IN LOSS. HOWEVER, IT IS NOT CLEAR WHETHER THE IMPUGNED SALES WERE ACCOUNTED IN THE BOOKS OF ACCOU NT PRIOR TO THE DATE OF SEARCH OR AFTER THAT DATE. THOUGH THE IMPUGNED LOO SE SLIPS DO SUGGEST THAT SOME PORTION OF SALES WAS NOT ACCOUNTED, YET WE NOT ICE THAT THE ASSESSING OFFICER DID NOT COMPARE THE NOTING MADE IN THE IMPU GNED SLIPS WITH THE BOOKS OF ACCOUNT SEIZED DURING THE COURSE OF SEARCH TO ESTABLISH THE FACT OF SUPPRESSION OF SALES. 4. IN THE ALTERNATIVE, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IF AT ALL ANY ADDITION IS WARRANTED, THE ADDIT ION MAY BE RESTRICTED TO THE AMOUNT OF GROSS PROFIT. IN THIS REGARD, THE LEARNED AUTHORISED IT(SS)A NO.17/VIZAG/2002 PADMAPRIYA CEMENTS,SRIKAKULAM PAGE 3 OF 3 REPRESENTATIVE PLACED RELIANCE ON THE DECISION OF H ON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GURUBACHHAN SINGH J JU NEJA REPORTED IN (2008) 302 ITR 63. THE LEARNED DEPARTMENTAL REPRESENTATIV E, HOWEVER, STRONGLY OBJECTED TO THE SAID PLEA OF THE ASSESSEE. HOWEVER , WE FIND FORCE IN THE PLEA OF THE LEARNED A.R. THE FACT REMAINS THAT THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NOT REFERRED TO AT ALL IN ORDER TO ES TABLISH THE FACT OF SUPPRESSION OF SALES OR THE COST OF PRODUCTION. IN SUCH A KIND OF SITUATION, IN OUR VIEW, THE ADDITION OF THE GROSS PROFIT ON TH E ALLEGED UNACCOUNTED SALES WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSI NG OFFICER TO SUSTAIN THE ADDITION TO THE EXTENT OF GROSS PROFIT ON THE SALE OF RS.4,05,000/-. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 7 TH OCTOBER, 2010. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 07-10-2010 COPY TO 1 M/S. PADMA PRIYA CEMENTS, G.T. ROAD, SRIKAKULAM 2 DY.COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, VI SAKHAPATNAM 3 4. THE CIT HYDERABAD THE CIT(A)-I, HYDERABAD 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM