M/S ANURAG SALES V. INCOME TAX OFFICER

TAXC/3/2011

AI Insights

The case involves M/s. Anurag Sales, a company engaged in the business of purchasing and selling iron and steel, which appealed against the order of the Income Tax Appellate Tribunal, Bilaspur. The appeal was related to the assessment year 2006-07, where the Assessing Officer added \\u20b926,45,032 as unexplained investment based on discrepancies between the stock reported to the bank and the stock recorded in the company's books. The Commissioner of Income Tax (Appeals) reduced this amount to \\u20b913,13,014, which was upheld by the Tribunal. The High Court dismissed the appeal, agreeing with the lower authorities' findings and methods of calculation.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 766567 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 29-07-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: ANAND DADARIA
• Assessee Lawyers: SHASHANK DUBEY; ANAND TIWARI
• Keywords: Assessment appeal; Income enhancement; Jurisdiction challenge; Unexplained investment
• Section: 143(2); 260-A

Judgement Text

"IN THE HON'BLE HIGH COURT OF JUDICATURE FOR CHHATTISGARH AT BILASPUR Tax Case No. 5 a 2-0 U Appellant \"(Assessee) .....^^^ ..^••\"\"\"^.^^T' ^ ^^«->^\"Ve^ ^•y^^^'-'\" »» l M/s. Anurag Sales, Dada Badi JawaharNagarWard, M.G. Road, Raipur(C.G.) Respondent ^Revenue) Income Tax Officer, Circle 1(2), Raipur(C.G.) Memo of Appeal under sectLpn 260-A^Q^f the Income Tax Act 1961 ^ HIGH COURT OF CHHATTISGARH AT BILASPUR CORAM: HON'BLE SHRI YATINDRA SINGH, C.J. HON'BLE SHRI R.S. SHARMA, J. Appellant (Assessee) Tax Case No.03 of 201 1 M/s Anurag Sales VERSUS Income Tax Officer Resoondent : (Revenue) Income Tax Appeal under Section 260-A of Income Tax Act. 1961 Appearance: Shri Shashank Dubey, Senior counsel with Shri Anand Mohan Tiwari, counsel for the Appellant Shri Anand Dadaria, counsel for the Respondent. JUDGEMENT (29thJuly,2013) 1. This is a tax appeal against the order dated 14.07.2010 passed by the Income Tax Appellate Tribunal, Bilaspur Bench, Bilaspur (the Tribunal) in the appeal filed by M/s. Anurag Sales (the Assessee) in respect of the Assessment Year (AY) 2006-07. THE FACTS 2. The Assessee filed his return under the Income Tax Act (the Act) on 31.10.2006. The Assessing Officer (the AO) issued a notice to the Assessee on 12.10.2007 under section 143(2) of the Act to come and explain the certain points in the accounts. 3. The AO was changed and thereafter another notice was issued to the Assessee on 24.11.2008 to appear and explain the points. Thereafter, the AO by order dated 26.12.2008 enhanced the income by making addition of of ^26,45,032/- as unexplained investment. 4. Aggrieved by the aforesaid order, the Assessee filed an appeal before the Commissioner of the Income Tax (Appeals) (the CIT-A). The CIT-A partly allowed the appeal on 06.10.2009 and restricted the addition to ^13,13,014/-. 5. Aggrieved by the aforesaid order, the Assessee filed an appeal before the Tribunal. It was dismissed on 14.07.2010. Hence, the present appeal. THE DECISION 6. We have heard counsel for the parties. 7. This appeal was admitted on 07.06.2011 on the following substantial questions of law: *(i) Whether the proceedings drawn and assessment made by service of notice under Section 143(2) of the Income Tax Act 1961, after prescribed period as per proviso to sub clause (ii) of clause (2) was valid? (ii) Whether the finding of the assessing officer as also the appellate authority regarding difference in stock was perverse and contrary to the facts and material available on record?' 1stPoint: 8. The first point was not raised before any authorities below. It has been raised for the first time before this court. However, the counsel for the Assessee submits that: (i) The question relates to the jurisdiction and it could be raised at any time; (ii) The notice under section 143(2) of the Act could be issued within 12 months from the date offiling ofthe return; (iii) The notice dated 24.11 .2008 was beyond 12 months from the date Offiling ofthe return, namely, 31.10.2006 and as such the notice wasillegal. The counsel for the Income Tax Department (the Department) submits that the invalidity of the notice cannot be raised for the first time before this court. f\"€ ^..- I? ¥te?^%^ 1 '. •^••^^j ^^ 9. It is not necessary for us to deal the first submission raised by the counsel for the Assessee or the submission of the counsel for the Department as on merits the first point is to be decided againstthe Assessee. 10. The first notice was issued on 12.10.2007, within 12 months from the date of filing of the return. The subsequent notice was merely a notice to appear on a particular date. As the first notice was within time, it cannot be said to be invalid. 2\"d Point: 11. The Assessee does business of purchasing and selling of iron and steel. It has also hypothecated the stock of iron and steel items with Punjab National Bank, Raipur (the Bank). 12. The AO called for the information from the Bank and the Bank had informed that the Assessee had showed the closing stock at ^2,62,11,000/-, whereas in the audit report the closing stock was shown to be ^2,35,65,968/-. It is for this reason, that the AO had added the difference of ^26,45,032/- as unexplained amount. 13. The CIT-A did not agree with the method adopted by the AO. It considered the amount of quantity shown in the books of the Assessee as well as the quantity shown to the Bank. As the more quantity was shown, so faras plate was concerned, ittook that excess of 49.16MT into account. 14. The CiT-A took this excess quantity and after multiplying itwith the value of plates per MT at ^26,709/- per tonne, restricted the addition to ^13,13,014/-. This calculation was upheld by the Tribunal. 15. The counsel for the Assessee submits that: • In respect of the plates the excess quantity by 49.16 MT was shown, but in respect of other items of iron and steel, the lesser quantity was shown to the Bank; ^ • The total quantity shown to the Bank was 951 MT, whereas in the books was shown to be 953.540MT; • The quantity shown in the books was more than the quantity shown to the Bank; • The unexplained amount cannot be more, but could be less than the one shown in the Bank. 16. It is not disputed by the Assessee that there was difference in the quantity as well as price shown to the Bank and submitted in the accounts. 17. The Assessee does not deal with one item ofthe iron and steel, but it deals with the five different items. The submission of the counsel for the Assessee would have merit if the price of every item was one and the same. But there is nothing on the record to that it was the same. 18. In the above-mentioned facts scenario, if the Tribunal and the CIT-A, the two authorities below, taken the access amount of plates as unexplained and added its value as an unexplained investment then it cannot be said that this finding was perverse. nimmi 19. Both substantial question of law are decided against the Assessee and in favour of the Department. The tax appeal has no merit. It is dismissed. J^.__ Sd/- Chief Justice Sd/- R.S. Sharma Judge "