K.Anjit Rao V. ITO, Ward 3, Karimnagar

ITTA/296/2003

AI Insights

The case involves M/s. K.Anjit Rao, a partnership firm engaged in the business of purchasing and selling arrack, which filed an appeal against the orders of the Income Tax authorities concerning the assessment year 1989-90. The Assessing Officer had made additions to the income reported by the firm, citing suppression of sales and disallowance of certain expenditures due to lack of proper vouchers. The firm's appeals at various levels, including the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, were unsuccessful, leading to this further appeal under Section 260A of the Income Tax Act. The primary legal contention was whether the Assessing Officer's adjustments to the sale and purchase prices indicated a disbelief in the books of account, which the court found was not the case.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 796008 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 05-11-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: S R ASHOK
• Assessee Lawyers: A V KRISHNA KAUNDINYA
• Keywords: Assessing Officer; Books of account; Disallowed Expenditure; Income Tax; Suppression of sales
• Section: 143(2); 260A

Judgement Text

" * THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM + I.T.T.A.No.296 of 2003 %Date: 05.11.2014 #M/s. K.Anjit Rao. …appellant. and $ ITO, Ward 3, Karimnagar. …Respondent. ! Counsel for appellant: Sri A.V.Krishna Kaundinya ^ Counsel for Respondent : Sri S.R.Ashok < GIST: > HEAD NOTE: ? Cases referred THE HON’BLE SRI JUSTICE L.NARASIMHA REDDY AND THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.296 of 2003 JUDGMENT: (Per the Hon’ble Sri Justice L.Narasimha Reddy) The appellant is a partnership firm. During the assessment year 1989-90, it was undertaking the business in purchase and sale of arrack. In the return filed by it, it has shown income of Rs.6,41,380/-. The Assessing Officer issued a notice under Section 143(2) of the Income Tax Act, 1961 (for short ‘the Act’), and after taking into account, the remarks offered by the appellant, he passed an order, dated 27.03.1992. The Assessing Officer made an addition of Rs.2,48,250/- towards suppression of sales and a sum of Rs.2,36,556/- was disallowed as expenditure, on the ground that they are not supported by proper vouchers, and accordingly, the income tax was levied. The appellant filed an appeal before the Commissioner of Income Tax (Appeals), aggrieved by the order of assessment. The appeal was dismissed through order, dated 16.08.2002. Thereupon, the appellant filed I.T.A.No.935/Hyd/2002 before the Hyderabad Bench ‘B’ of the Income Tax Appellate Tribunal. The appeal was dismissed on 13.03.2003. Hence, this further appeal under Section 260A of the Act. Heard Sri A.V.Krishna Kaundinya, learned counsel for the appellant, and Sri S.R.Ashok, learned counsel for the respondent. The principal contention urged by the appellant is that, once an Assessing Officer has disbelieved the books of account, he ought not to have dealt with the facts and figures mentioned therein, for the purpose of disallowing certain claims. However, the facts borne out by record do not support this contention. Nowhere in the proceedings, the Assessing Officer stated that he did not believe the books of account. He took certain important facts, such as the quantity of the liquor, sale price, purchase price mentioned therein, into account. The fact that he increased the sale price and reduced the purchase price by one rupee, each, does not amount to the disbelief of the books of accounts. In case the appellant has any proof to show that the sale price and purchase price, as mentioned in the books of account was correct, he could have relied upon the same, even before the appellate authority or the Tribunal. The disbelief of vouchers in relation to certain items of expenditure, does not lead to the conclusion that the Assessing Officer has disbelieved the books of account altogether. The acceptance of books of account by an Assessing Officer does not lead to a conclusion that all the entries made therein must be taken on their face value. In a given case, certain entries in the books of account, may not be treated as correct, and it is always for the assessee to convince the concerned officials, as to the accuracy of the entries in the books of account. Once it emerges that the Assessing Officer did not disbelieve the books of account, the findings of fact recorded by him and upheld by the Commissioner of Appeals and the Tribunal, cannot constitute the subject-matter of a further appeal under Section 260A of the Act. The appeal is accordingly dismissed. There shall be no order as to costs. The miscellaneous petitions filed in this appeal shall also stand disposed of. ____________________ L.NARASIMHA REDDY, J. _____________________ CHALLA KODANDA RAM, J. Date:05.11.2014 L.R. copy to be marked. GJ "