Paro Food Products V. Commissioner of Income Tax-VI, Hyderabad

ITTA/452/2013

AI Insights

The case involves Paro Food Products, the appellant, contesting a decision by the Commissioner of Income Tax-VI, Hyderabad, regarding additions made to their income assessment based on unaccounted sales and purchases. The Tribunal had reversed the relief previously granted by the CIT(A), leading to the current appeal. The main legal issues revolved around the correctness of the Tribunal's decision to sustain the additions made by the Assessing Officer, which were based on a sales tax assessment order that had been set aside but later reinstated in part. The Tribunal's findings were primarily factual, focusing on the discrepancies in the appellant's cash book and other financial records.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 805148 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 25-09-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: Reassessment; Unaccounted purchases; Unaccounted sales; Cash deficit; Sales tax assessment
• Section: 68

Judgement Text

"IN THE HIGH COURT OF JUDICATURE, ANDHRA PRADESH AT HYDERABAD THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE K.C. BHANU I.T.T.A. No. 452 of 2013 DATE: 25.09.2013 Between: Paro Food Products, Hyderabad. … Appellant And Commissioner of Income Tax-VI, Hyderabad. … Respondent This Court made the following: THE HON’BLE THE CHIEF JUSTICE SRI KALYAN JYOTI SENGUPTA AND THE HON’BLE SRI JUSTICE K.C. BHANU I.T.T.A. No. 452 of 2013 JUDGMENT: (Per the Hon’ble the Chief Justice Sri Kalyan Jyoti Sengupta) This appeal has been preferred against a portion of the impugned judgment and order of the learned Tribunal, dated 08.03.2013, and sought to be admitted on the following suggested questions of law: (A) Whether on the facts and in the circumstances of the case, the appellate Tribunal erred in sustaining the order of the assessing officer by reversing the relief given by the CIT(A) and upholding the additions made in the reassessment founded on the basis of sales tax assessment order, dated 28.10.2004 that stood set aside later by the Appellate Deputy Commissioner (CT) vide order dated 29.09.2007? (B) Without prejudice to the above, whether on the facts and in the circumstances of the case, the appellate Tribunal erred in deleting the credit given by the CIT(A) towards sales up to 03.10.2002 for explaining the cash deficit without citing any reason whatsoever? (C) Whether on the facts and in the circumstances of the case, the appellate Tribunal ought to have held that addition made by the assessing officer towards alleged cash deficit could not be sustained u/s. 68 of the Act in as much the addition was not towards any sum credited in the books of account maintained by the appellant? Learned counsel for the appellant at the time of argument says that this appeal is intended to prefer only in relation to the issue regarding deletion of the addition of Rs.5 lakhs out of Rs.46,26,864/- made by the Assessing Officer towards undisclosed profit resulting out of unaccounted sales and unaccounted purchases without taking on record any material evidence and only given relief on the ground of natural justice. The learned Tribunal in relation to the aforesaid issue has come to the fact finding as follows: “We find that the assessee itself maintained this cash book and it was found during the inspection by the Sales Tax Department. The receipts and payments shown in the cash book are matching with the entries in other books i.e., cash deposits made in the bank, Sales Register, etc. The assessee has thus failed to explain the sources of the cash satisfactorily. It is evident from the maintenance of the cash book that the assessee did not have the sources for the cash deposits/payments made. It is seen that the assessee has resorted to unaccounted purchases and unaccounted sales which has generated profits. These unaccounted profits amounting to Rs.46,26,864/- are taxed now. The telescoping benefit for the cash generated out of the unaccounted profits is to be given against the negative cash balance due to shortfall in cash in the books of account. However, the cash generated from the unaccounted profit is for the entire year whereas the peak of negative of cash is as on 03.10.2002. Therefore, it becomes necessary to arrive at the cash available out of the unaccounted sales and unaccounted purchases on a daily basis. For this purpose, the AO assumed that the date of receipt on which the material relating to unaccounted purchases as received is the date on which the cash is paid for the same. Similarly, the date on which unaccounted sales was made is assumed as the date on which cash is received for the same. This assumption is made because there is no evidence as to when the cash was paid for the unaccounted purchases and when the cash was realized for the unaccounted sales. Accordingly, the cash available out of the unaccounted profits is worked day-wise which is available as source for the shortfall in cash in the books of account. When both are compared the peak difference of Rs.66,01,156/- was arrived on 20.05.2002 i.e., the sources for this amount is not available even though the cash generated out of the unaccounted profits is taken considered by the A.O.” It appears that the above finding is absolutely a factual finding and cannot be said to be perverse. In view of this situation, it is difficult for this Court to reach further fact finding by admitting the appeal. Under these circumstances, we do not find any element of law in this appeal. The appeal is accordingly dismissed. _____________________ K.J. SENGUPTA, CJ ________________ K. C. BHANU, J Date: 25.09.2013 ES "