MAHAVIR TRADING COMPANY,PARWANOO V. ACIT, CIRCLE, PARWANOO

ITA 435/CHANDI/2022

AI Insights

The case involves M/s Mahavir Trading Company, which appealed against the order of the Commissioner of Income Tax (Appeals), Shimla, concerning an assessment for the year 2005-06. The appeal was a result of a survey conducted in 2004 where the assessee surrendered Rs.30 Lacs, later contested in the revised return. The Tribunal had previously remanded the case for a speaking order, leading to the current appeal. The primary contention was the addition of Rs.9.09 Lacs to the income, which the Tribunal found unsupported by concrete evidence, thus partly allowing the appeal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 714239 (ITAT-CHANDIGARH)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2005-2006
• Other Referred Cases: Cognizance for Extension of Limitation (127 Taxmann.com 72)
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RANJIT KAUR LD.
• Assessee Lawyers: NEERAJ JAIN LD
• Keywords: Revised return
• Section: 143(3); 133A

Judgement Text

"1 IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, CHANDIGARH PHYSICAL HEARING BEFORE HON’BLE SHRI LALIET KUMAR, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपीलसं./ ITA No. 435 /CHANDI/2022 (िनधाŊरणवषŊ / Assessment Year: 2005-06) M/s Mahavir Trading Company Booth No. 18 Sector-1 Parwanoo (HP) 173220 बनाम/ Vs. ACIT-Circle Parwanoo Himachal Pardesh 173220 ̾थायीलेखासं./जीआइआरसं./PAN/GIR No. AAEFM-8949-E (अपीलाथŎ/Appellant) : (ŮȑथŎ / Respondent) अपीलाथŎकीओरसे/ Appellant by : Shri Neeraj Jain (CA) – Ld. AR ŮȑथŎकीओरसे/Respondent by : Dr Ranjit Kaur (Addl. CIT) – Ld.Sr.DR सुनवाईकीतारीख/Date of Hearing : 26-06-2025 घोषणाकीतारीख /Date of Pronouncement : 04-08-2025 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2005-06 arises out of an order of learned Commissioner of Income Tax (Appeals), Shimla [CIT(A)] dated 30-01-2020 in the matter of an assessment framed by Ld. AO u/s 143(3) on 28-12-2007. This is second round of appeal. In the first round, the assessment was confirmed by Ld. CIT(A) vide order dated 26-05-2008. However, the matter was remanded back by Tribunal vide ITA No.795/Chd/2009 Printed from counselvise.com 2 order dated 13-10-2009 to Ld. CIT(A) for fresh adjudication by way of speaking order. Pursuant to the same, another order has been passed by Ld. CIT(A) on 30-01-2020 dismissing the appeal of the assessee. Aggrieved, the assessee is in further appeal before us. 2. The registry has noted delay of 770 days in the appeal, the condonation of which has been sought by Ld. AR on the strength of condonation petition. It has been stated that the appeal should have been filed by the assessee before 07-04-2020 but the same has been filed on 16-05-2022. Considering the fact that the substantial period of delay falls within lockdown situation arising out of Covid-19 Pandemic and also considering the directions of Hon’ble Apex Court in Cognizance for Extension of Limitation (127 Taxmann.com 72), the delay is condoned and we proceed for adjudication of appeal on merits. Proceedings before lower authorities 2.1 The assessee is stated to be a partnership concern which is engaged in wholesale trading of karyana goods at Parwanoo. The assessee was subjected to survey on 02-11-2004 wherein the assessee surrendered a sum of Rs.30 Lacs. The same include surrender of Rs.21 Lacs for difference in sundry debtors’ balances whereas Rs.9 Lacs was surrendered for other discrepancies. Subsequently, the assessee filed return of income on 28-10-2006 declaring income of Rs.97,176/-. However, the return was revised on 27-12-2006 declaring income of Rs.21.88 Lacs which include surrendered amount of Rs.20.91 Lacs out of Rs.30 Lacs. The Ld. AO Printed from counselvise.com 3 added the remaining amount of Rs.9.09 Lacs and framed the assessment. 2.2 The Ld. CIT(A), in second round of proceedings pursuant to the directions of Tribunal, considered the written submissions of the assessee. In these submissions, the assessee pleaded for acceptance of original returned income of Rs.97,176/-. In other words, the assessee opposed any addition of surrendered income. The Ld. CIT(A), considering the surrender as made by the assessee observed that there was discrepancy in the sundry debtors, creditors, stock and cash-in-hand. The assessee forestalled further investigation and enquiries by conveniently offering the surrender on account of these discrepancies. The assessee did not retract the statement and accepted the discrepancies. The assessee failed to establish as to how the surrendered income was accounted for in the regular books of accounts. Finally, the assessment was upheld against which the assessee is in further appeal before us. Our findings and Adjudication 3. The fact that emerges is that during survey u/s 133A on 02-11- 2004, one of the partners of the assessee-firm made surrender to make up for discrepancies in stock, cash, creditors and under other misc. heads. The assessee, in its revised return of income, admitted additional income of Rs.20.91 Lacs and accordingly, Ld. AO proceeded toadd back the remaining amount of Rs.9.09 Lacs to the income of the assessee, The assessee stated that the surrendered difference was to make up for the sundry debtors’ balances as reflected in the regular Printed from counselvise.com 4 books vis-à-vis sundry debtors’ balances as written in hand-written ledger. However, subsequently the assessee disputed even the said surrender of Rs.20.91 Lacs. The debtors balance as on 01-04-2004 in the hand written ledger was Rs.71.83 Lacs whereas the same was reflected in the Balance Sheet as Rs.51 Lacs. However, the assessee contended that the correct balance in hand written ledger was merely Rs.51.02 Lacs and there was only a small difference of Rs.2,206/-. The assessee also opposed further addition of Rs.9.09 Lacs. The Ld. AO has made the assessment as per surrender made by the assessee which was as under: - Amount Surrendered Difference in Sundry Debtors Rs.20,82,780/- Rs. 21 Lacs Debtors as shown in the Balance Sheet for FY 2003-04 (as on 31-03-2004) Rs.51,00,717/- Debtors as shown in the hand written ledger for the FY 2004-05 as on 01-04- 2005) Rs.71,83,497/- To cover up unknown discrepancies Rs.9 Lacs Total Rs.30 Lacs 4. Upon careful consideration of case records, it could be seen that difference was noted in Sundry Debtors balances in regular books and balances shown in the hand written ledger. The assessee admitted to the same and made surrender of Rs.21 Lacs to account for the same. The admission is clearly backed by discrepancies in the regular books as well as entries made in the hand written ledger. Therefore, the addition to that extent is to be confirmed. However, the surrender of Rs.9 Lacs is for unknown discrepancies without there being any concrete evidence to support the same. The assessee stated that the Printed from counselvise.com 5 discrepancy in the stock could be reconciled and no admission was made on this account. Similarly, no excess cash has been found but there is shortage of cash. Lastly, no specific defect has ben noted in the balances of sundry creditors. Therefore, the addition of Rs.9.09 Lacs as made by Ld. AO could not be sustained. In other words, Ld. AO is directed to accept the revised income filed by the assessee at Rs.21,88,707/-. We order so. 5. The appeal stands partly allowed. Order Pronounced on 04-08-2025. Sd/- Sd/- (LALIET KUMAR) (MANOJ KUMAR AGGARWAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 04-08-2025. आदेश की Ůितिलिप अŤेिषत /Copy of the Order forwarded to : 1. अपीलाथŎ/Appellant 2. ŮȑथŎ/Respondent 3. आयकरआयुƅ/CIT 4. िवभागीयŮितिनिध/DR 5. गाडŊफाईल/GF ASSISTANT REGISTRAR ITAT CHANDIGARH Printed from counselvise.com "