M/s. Satish Tobacco Industries, Ahmedabad V. The Income tax Officer, Ward-12(1), Ahmedabad

MA 77/AHD/2012

• Counselvise Citation: [2013] 123 COUNSELVISE.COM (IT) 9761 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 11-01-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 09-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: Y P VERMA
• Assessee Lawyers: ANIL N PATEL
• Keywords: Business income; Income from undisclosed sources; Deemed to accrue or arise in india
• Section: 69C; 69

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , . ! ' ,#$ # % BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER MA NO.77/AHD/2012 (IN ./ IN I.T.A. NO.45/AHD/2007) ( ! ' ! ' ! ' ! ' / / / / ASSESSMENT YEAR : 2003-04) M/S.SATISH TOBACCO INDUSTRIES 208, SARTHAK COMPLEX 2 ND FLOOR OPP.URJA HOUSE NR.SWASTIK 4 RASTA CG ROAD AHMEDABAD 380 009 ! ! ! ! / VS. THE ITO WARD-12(1) AHMEDABAD ( #$ ./)* ./ PAN/GIR NO. : AAJFS 6453 L ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . # / APPELLANT BY : SHRI ANIL N.PATEL, AR ,-(+ / . # / RESPONDENT BY : SHRI Y.P.VERMA, SR.D.R. !0 / 1$ / / / / DATE OF HEARING : 04.1.2013 2 ' / 1$ / DATE OF PRONOUNCEMENT : 11/01/13 #3 / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS MISCELLANEOUS PETITION HAS BEEN FILED BY THE APPLICANT ON 9.04.2012 ARISING FROM AN ORDER OF THE TRIBUNAL AS MENTIONED IN THE NOMENCLATURE HEREINABOVE DATED 23/04/2010. 2. THE APPLICANT HAS SOUGHT FOLLOWING RECTIFICATION . MA NO.77/AHD/2012 (OUT OF ITA NO.45/AHD/ 2007) M/S.SATISH TOBACCO INDUSTRIES VS. ITO ASST.YEAR 2003-04 - 2 - 1. GROUND NO.2 OF THE APPEAL IS NOT AT ALL CONSI DERED NOT ADJUDICATED AND NO ORDER IS PASSED THEREON. 2. IN THE CASE OF M/S.FASHION WORLD VS. ASST. CIT D ECIDED BY THE HONBLE TRIBUNAL IN ITA NO.1634/AHD/2006 ON DTD . 12/02/2010 AND CITED BY THE ASSESSEE, THE TRIBUNAL HELD THAT EXCESS STOCK IS BUSINESS INCOME AND THEREFORE IT IS PATENT ERROR ON PART OF THE TRIBUNAL TO HOLD IN A ASSESSEE S CASE THAT IT IS NOT BUSINESS INCOME. IN FASHION WORLD T HE TRIBUNAL HELD, ONCE SUCH EXCESS INVESTMENT IS TAXE D AS UNDECLARED BUSINESS RECEIPT THAN TAXING IT FURTHER AS DEEMED INCOME UNDER SECTION 69 WOULD NOT BE NECESSARY. T HE TRIBUNAL COMMITTED PATENT ERROR IN HOLDING THAT ASS ESSEES CASE IS NOT COVERED BY FASHION WORLD DECISION. 3. ANOTHER, A MORE IMPORTANT APPARENT ERROR IS THAT ASSESSEE HAD ALREADY INCLUDED THE EXCESS STOCK IN STOCK BOOK ON DATE OF SURVEY (AS EVIDENCED BY PAGES 12,13,15,17,18 OF PAPER BOOK BEFORE TRIBUNAL) AND THEREFORE TO UPHOLD ADDIT ION THEREOF AGAIN IS AN APPARENT ERROR ON PART OF THE T RIBUNAL BECAUSE IT BECOMES A PATENT ERROR OF DOUBLE ADDITIO N. 3. FROM THE SIDE OF THE APPLICANT, LD.AR MR.ANIL N. PATEL APPEARED AND INFORMED THAT A SURVEY WAS CONDUCTED U/S.133A O F IT ACT AT THE BUSINESS PREMISES OF THE ASSESSEE-FIRM. AN EXCESS STOCK WAS WORKED AT RS.5,10,657/-. A STATEMENT WAS RECORDED AND THAT P OSITION OF THE STOCK WAS ADMITTED. LD.AR HAS PLEADED THAT THE ASSESSEE -FIRM HAD ONLY SOURCE OF INCOME FROM BUSINESS. EVEN IF AN EXCESS STOCK W AS FOUND, BUT THAT STOCK REPRESENTED THE BUSINESS INCOME OF THE ASSESS EE. LD.AR HAS DRAWN OUR ATTENTION ON SOME OF THE STATEMENTS WHICH WERE PLACED BEFORE THE REVENUE AUTHORITIES TO DEMONSTRATE THAT THE EXCESS STOCK IN QUESTION WAS DULY ENTERED INTO THE BOOKS OF ACCOUNTS AND THE EXC ESSIVE WEIGHT WAS MA NO.77/AHD/2012 (OUT OF ITA NO.45/AHD/ 2007) M/S.SATISH TOBACCO INDUSTRIES VS. ITO ASST.YEAR 2003-04 - 3 - MADE PART AND PARCEL OF THE BOOKS WITHOUT DEBITING ANY EXPENDITURE TOWARDS PURCHASE, HENCE NO SEPARATE ADDITION WAS CA LLED FOR. LD.AR HAS THUS PLEADED THAT THE IMPUGNED ADDITION WAS NOTHING BUT DOUBLE TAXATION IN THE HANDS OF THE ASSESSEE. IT HAS ALSO BEEN ARG UED THAT THE VIEW TAKEN IN THE CASE OF M/S.FASHION WORLD (ITA NO.1634/AHD/2 006 A.Y. 2002- 03) ORDER DATED 12.2.2010 OF ITAT B BENCH AHMEDAB AD HAS NOT BEEN PROPERLY CONSIDERED WHILE PASSING THE JUDGEMENT. L D.AR HAS PLEADED THAT THE EXCESS STOCK SHOULD HAVE BEEN CONSIDERED A S BUSINESS INCOME OF THE ASSESSEE INSTEAD OF INCOME FROM OTHER SOURCES A S HELD IN THIS CITED DECISION, BUT IT WAS OLD. ACCORDING TO HIM, AN AP PARENT MISTAKE HAS BEEN COMMITTED, THEREFORE REQUIRED TO BE RECTIFIED. 4. FROM THE SIDE OF THE REVENUE, LD.SR.DR MR.Y.P.VE RMA APPEARED AND PLEADED THAT RELIANCE PLACED ON M/S.FASHION WO RLD (SUPRA) WAS MISPLACED BECAUSE THE ISSUE BEFORE THE RESPECTED TR IBUNAL WAS THE ALLOWABILITY OF DEDUCTION U/S.40(B) OF IT ACT AND F OR THAT PURPOSE, IT WAS HELD THAT THE ADDITION IN RESPECT OF EXCESS STOCK I S TO BE CONSIDERED AS BUSINESS INCOME FOR THE PURPOSE OF CALCULATION AS P RESCRIBED U/S.40(B) OF IT ACT. HE HAS STRONGLY SUPPORTED THE VIEW TAKEN BY THE TRIBUNAL AND PLEADED THAT NO MISTAKE WAS COMMITTED. 5. WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERUSED THE ORDER IN QUESTION. ON CAREFUL READING, WE HAVE NOTED THAT T HE DECISION OF M/S.FASHION WORLD WAS DULY CONSIDERED BY THE RESPEC TED COORDINATE BENCH. A FINDING WAS GIVEN THAT THE UNACCOUNTED ST OCK SHOULD HAVE BEEN OFFERED AS UNACCOUNTED INCOME SEPARATELY IN RETURN OF INCOME. THE MA NO.77/AHD/2012 (OUT OF ITA NO.45/AHD/ 2007) M/S.SATISH TOBACCO INDUSTRIES VS. ITO ASST.YEAR 2003-04 - 4 - INVESTMENT MADE IN SUCH STOCK WAS NOT RECORDED IN T HE BOOKS OF ACCOUNTS. A CONSCIENTIOUS VIEW HAS TAKEN THAT THE AO HAD RIGHTLY MADE THE ADDITION U/S.69C OF IT ACT. RELEVANT PARAGRAPH NO.7 IS REPRODUCED BELOW:- 7. AFTER HEARING BOTH THE SIDES, WE HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. IT IS PERTINENT T O NOTE THAT EXCESS STOCK FOUND BY THE ASSESSEE IS ACCOUNTED IN THE BOO KS OF ACCOUNT. EITHER IT IS SOLD SUBSEQUENTLY OR SHOWN AS CLOSING STOCK AT THE END OF THE PREVIOUS YEAR UNDER APPEAL. SUCH UNACCOUNTED S TOCK SHOULD HAVE BEEN OFFERED AS UNACCOUNTED INCOME SEPARATELY IN TH E RETURN OF INCOME AND SHOULD NOT HAVE BEEN COMBINED IN THE PRO FIT & LOSS ACCOUNT. BY ADMITTING THE STOCK IN CLOSING STOCK, THE ASSESSEE HAD IN EFFECT ONLY ADMITTING GROSS PROFIT ON THE SALE OF U NACCOUNTED STOCK WITHOUT ADMITTING THE ORIGINAL SOURCE OF INVESTMENT WHICH WAS UTILIZED FOR THE PURPOSE OF SUCH STOCK. THE INVESTMENT MADE IN SUCH STOCK IS NOT RECORDED IN THE BOOKS OF ACCOUNT. WE ARE, THER EFORE, OF THE VIEW THAT THE ASSESSING OFFICER HAS RIGHTLY MADE THE ADD ITION U/S.69C OF THE IT ACT, 1961 AND THE LEARNED CIT(APPEALS) HAS GIVEN COGENT REASON FOR UPHOLDING THE SAME. THE ITAT AHMEDABAD BENCH B IN THE CASE OF M/S.FASHION WORLD (SUPRA), NOWHERE HELD THAT EXC ESS STOCK FOUND DURING THE COURSE OF SURVEY CANNOT BE ASSESSED U/S. 69C OF THE IT ACT, 1961. ONCE IT IS HELD THAT SOURCE OF INVESTMENT IN THE UNACCOUNTED EXCESS STOCK, ARE NOT EXPLAINED IT CAN BE ASSESSED U/S.69C OF THE IT ACT, 1961. WE, THEREFORE, DECLINE TO INTERFERE WIT H THE ORDER OF THE LEARNED CIT(APPEALS). 5.1. NOW THE SITUATION IS THAT THE RESPECTED COORDI NATE BENCH HAS DULY ANALYSED THE FACTS OF THE CASE AND THEREAFTER ARRIV ED AT A CONCLUSION THAT THE EXCESS STOCK FOUND DURING THE COURSE OF SURVEY WAS TO BE ASSESSED U/S.69C OF THE IT ACT. THAT FINDING OF FACTS CANN OT BE REVIEWED OR ALTERED BY US U/S.254(2) OF IT ACT. IT IS ALSO WO RTH TO MENTION THAT THE DECISION OF M/S.FASHION WORLD (SUPRA) WAS IN RESPEC T OF A DIFFERENT CONTEXT. THE ISSUE INVOLVED WAS THE APPLICABILITY OF THE PROVISIONS OF MA NO.77/AHD/2012 (OUT OF ITA NO.45/AHD/ 2007) M/S.SATISH TOBACCO INDUSTRIES VS. ITO ASST.YEAR 2003-04 - 5 - SECTION 40(B) OF IT ACT AND FOR THAT PURPOSE, IT WA S HELD THAT SUCH AN ADDITION WHICH WAS MADE ON ACCOUNT OF EXCESS STOCK WAS TO BE CONSIDERED AS BUSINESS INCOME FOR THE PURPOSE OF CA LCULATION OF THE BOOK PROFIT OF THE ASSESSEE AS PRESCRIBED U/S.40(B) OF IT ACT. AN ORDER/JUDGEMENT HAS TO BE APPLIED IN THE CONTEXT IN WHICH IT WAS DECIDED. LAW IS VERY WELL SETTLED IN RESPECT OF CITATION OF PRECEDENTS. A DECISION IS A PRECEDENT ON ITS OWN FACTS. EACH CASE PRESE NTS ITS OWN FEATURE. IF A JUDGEMENT IS IN RESPECT OF A PARTICULAR PROVISION S OF AN ACT, THEN THE SAID PRECEDENT IS REQUIRED TO BE APPLIED IN RESPECT OF THAT VERY PROVISION OF THE ACT AND THE LEGAL PROPOSITION LAID DOWN THER EIN CANNOT BE USED AS A GENERAL LEGAL PROPOSITION TO BE APPLIED UNIVERSALLY TO RESOLVE UNCONNECTED CONTROVERSY. FURTHER, WE ARE NOT INCLINED TO DEAL WITH A FRESH ARGUMENT OF THE ASSESSEE THROUGH WHICH THE LD. AR HAS NOW PL EADED THAT THERE WAS A DOUBLE ADDITION BECAUSE THE EXCESS STOCK HAD ALRE ADY BEEN OFFERED TO TAX. FIRSTLY, THIS LEGAL PLEA WAS NOT RAISED IN TH E GROUNDS OF APPEAL AND SECONDLY THE TRIBUNAL HAS GIVEN A CLEAR FINDING THA T THERE WAS UNRECORDED INVESTMENT MADE IN THE STOCK. WE HAVE LIMITED PO WER U/S.254(2) WHICH DOES NOT PRESCRIBE TO REWRITE AN ORDER. THE ASSESS EE HAS FAILED TO DEMONSTRATE ANY MISTAKE, WHAT TO SAY AN APPARENT MI STAKE, IN THE ORDER OF THE TRIBUNAL, THEREFORE, WE HEREBY DISMISS THIS MIS CELLANEOUS PETITION. 6. IN THE RESULT, THIS MISCELLANEOUS PETITION IS DI SMISSED. SD/- SD/- ( . ! ' ) ( ) #$ ( A. MOHAN ALANKAMONY ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIA L MEMBER AHMEDABAD; DATED 11/ 1 /2013 41..!, .!../ T.C. NAIR, SR. PS MA NO.77/AHD/2012 (OUT OF ITA NO.45/AHD/ 2007) M/S.SATISH TOBACCO INDUSTRIES VS. ITO ASST.YEAR 2003-04 - 6 - #3 / ,5 6#5' #3 / ,5 6#5' #3 / ,5 6#5' #3 / ,5 6#5'/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT 3. 7 / CONCERNED CIT 4. 7() / THE CIT(A)-XVIII, AHMEDABAD 5. 5:; ,! , , / DR, ITAT, AHMEDABAD 6. ;< =0 / GUARD FILE. #3! #3! #3! #3! / BY ORDER, -5 , //TRUE COPY// > >> >/ // / ) ) ) ) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DIRECT DICTATION ON COMPUTER DATED 4.1.2013 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 7.1.2013 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 11.1.13 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.1.13 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER