Sri Mahalakshmi Book Enterprises V. The Commissioner of Income Tax, Vijayawada

ITC/1/2011

AI Insights

M/s. Sri Mahalakshmi Book Enterprises, a book seller, was assessed for the year 1987-1988 after a survey under Section 133A of the Income Tax Act, 1961 revealed a significant stock value. The assessing officer added an amount to the petitioner's income, suspecting suppression of profit, which was partially upheld by the Appellate Commissioner and the Tribunal. The petitioner sought a reference to the High Court under Section 256(1), which was dismissed, leading to the current petition under Section 256(2). The court dismissed this petition, emphasizing that the applicability of Section 69A was not a legal question but a factual one, and the petitioner's earlier admissions during the appellate proceedings.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 796903 (HC-ANDHRA_PRADESH)
• Appeal Type: Others
• Pronouncement Date: 07-04-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Keywords: Assessment; Income Tax; Survey operations; Undisclosed income; Book Stock
• Section: 143(3); 69A; 133A; 256(1); 256(2); 217(1)

Judgement Text

"THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN I.T.C. No.1 OF 2011 Date:07.04.2011 Between: M/s.Sri Mahalakshmi Book Enterprises, Vijayawada .. Petitioner And The Commissioner of Income Tax, Vijayawada .. Respondent THE HON’BLE SRI JUSTICE V.V.S.RAO AND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN I.T.C. No.1 OF 2011 ORDER: (Per Hon’ble Sri Justice V.V.S.Rao) The petitioner, a book seller (novels and story books), filed their return for the assessment year 1987-1988 declaring an income of Rs.97,000/-. In August, 1986 survey operations, under Section 133A of the Income Tax Act, 1961 (the Act, for brevity), were conducted. The inventory prepared in the survey revealed that there was stock worth Rs.9,55,123/-. Therefore the assessing officer completed assessment under Section 143(3) of the Act making an addition of Rs.2,31,398/- towards suppression of profit from out of the closing stock. The petitioner appealed. The Appellate Commissioner reduced the addition to Rs.1,51,398/-. The petitioner then approached the Income Tax Appellate Tribunal. Though the levy of interest under Section 217(1) of the Act was remitted to the Appellate Commissioner, the learned Tribunal confirmed the order. The petitioner then took out an application, being R.A.No.26/Vizag/1998, under Section 256(1) of the Act requesting that a reference be made to this Court under the said provision. The said application, having been dismissed by the impugned order, the present petition is filed under Section 256(2) of the Act. The counsel for the petitioner submits that Section 69A of the Act, which deals with undisclosed income, has no application to the facts of the case, but the assessing officer and the appellate authority wrongly applied the said provision. He nextly contends that the book stock available on the date of survey is the stock which was returned by the retailers; in the publishing business it is treated as dead stock; and, therefore, no value can be notionally taken with reference to the stock or the normal profit as was done by the assessing officer. We have perused the impugned order. The question of applicability of Section 69A of the Act was not one of the questions which the petitioner wanted the learned Tribunal to refer to this Court - obviously the submission now made is an after thought. Secondly a perusal of the order of the Appellate Commissioner would show that the representative of the petitioner admitted that, in the line of business carried on by the petitioner, the normal profit would be around 30%. It appears the assessing officer assumed that the profit with reference to the book stock was not shown in the return and was suppressed and, therefore, an addition was made which stood reduced by the Appellate Commissioner. As rightly observed by the learned Tribunal it is a mere question of fact, and is not a question of law that was required to be referred to this Court under Section 256(1) of the Act. The petition is, accordingly, dismissed. There shall be no order as to costs. ________________ (V.V.S. RAO, J) _____________________________ RAMESH RANGANATHAN, J 07.04.2011 KH "