SRI.RAJAN.M.A V. INCOME TAX OFFICER, WARD-2(4), THRISSUR

WP(C)/4727/2017

AI Insights

The case involves Sri. Rajan M.A., the proprietor of ML Lonappan Hardware Merchant, who challenged an assessment order (Ext.P8) issued by the Income Tax Officer, Ward-2(4), Thrissur. The petitioner argued that a subsequent inspection by an Inspector, which reported a stock value significantly lower than assessed, should be considered. However, the court found that the inspection was not a statutory procedure and could not be relied upon to challenge the assessment. The court emphasized that the petitioner had previously conceded to a higher stock value during the assessment proceedings, which was the basis for the assessment order.

• Counselvise Citation: [2017] 140 COUNSELVISE.COM (IT) 755459 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 20-02-2017
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P K R MENON; JOSE JOSEPH; K M V PANDALAI
• Assessee Lawyers: ANIL NAIR; R SREEJITH; SOUMYA PRAKASH; MEKHALA BENNY
• Keywords: Appeal Remedy; Assessment Order; Inspection Report; Stock valuation
• Section: 131; 133A

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE K.VINOD CHANDRAN MONDAY, THE 20TH DAY OF FEBRUARY 2017/1ST PHALGUNA, 1938 WP(C).No. 4727 of 2017 (M) --------------------------- PETITIONER(S)/PETITIONER: ------------------------ SRI.RAJAN M.A., PROPRIETOR, ML LONAPPAN HARDWARE MERCHANT, HIGH ROAD, THRISSUR 680001. BY ADVS.SRI.ANIL D. NAIR SRI.R.SREEJITH KUM.SOUMYA PRAKASH KUM.MEKHALA M.BENNY SRI.JOSEPH GOPURAN RESPONDENT(S)/RESPONDENTS: -------------------------- INCOME TAX OFFICER, WARD-2(4), THRISSUR, PIN-680001. BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX SRI.K.M.V.PANDALAI, INCOME TAX DEPARTMENT THIS WRIT PETITION (CIVIL) HAVING COME UP FOR ADMISSION ON 20-02-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: EL WP(C).No. 4727 of 2017 (M) --------------------------- APPENDIX PETITIONER(S)' EXHIBITS ----------------------- EXHIBIT P1 TRUE COPY OF THE STATEMENT RECORDED ON 22/10/2013 EXHIBIT P2 TRUE COPY OF THE STATEMENT RECORDED ON 23/10/2013 EXHIBIT P3 TRUE COPY OF LETTER DTD 14/3/2014 SUBMITTED BY THE PETITIONER EXHIBIT P4 TRUE COPY OF THE NOTICE DTD 1/12/2016 OF THE RESPONDENT EXHIBIT P5 TRUE COPY OF LETTER DTD 9/12/2016 SUBMITTED BY THE PETITIONER TO THE RESPONDENT EXHIBIT P6 TRUE COPY OF LETTER DTD 26/12/2016 SUBMITTED BY THE PETITIONER TO THE RESPONDENT EXHIBIT P7 TRUE COPY OF THE AUDITED REPORT UNDER KVAT ACT EXHIBIT P8 TRUE COPY OF THE ORDER DTD 28/12/2016 OF THE RESPONDENT RESPONDENT(S)' EXHIBITS ----------------------- NIL TRUE COPY P.S. TO JUDGE EL K. VINOD CHANDRAN, J - - - - - - - - - - - - -- - - - - - - - - - - - - - - - W.P(C) No. 4727 of 2017 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 20th day of February, 2017 J U D G M E N T The petitioner is aggrieved with the assessment order passed at Ext.P8. Ideally the petitioner ought to have agitated the cause before the appellate authority. However, the petitioner's contention is that an inspection conducted by the Inspector, as deputed by the Assessing Officer itself disclosed the value of stock far below than that has been assessed under Ext.P8. 2. I have heard the learned Counsel for the petitioner and the learned Standing Counsel for the Department. 3. The petitioner's contention is based on an WPC.No.4727/2017 : 2 : inspection carried out by the Inspector deputed by the Assessing Officer at the stage of assessment proceedings. It is seen that the value of stock as reported by the Inspecting Officer was only Rs.2 crores. The learned Standing Counsel for the Department however, submits that earlier at the time of survey a statement was recorded under Section 133 A of the Income Tax Act, 1961 on 22.10.2013 which even by binding precedents cannot be relied on by the Assessing Officer. However, subsequently the assessee appeared along with an authorised representative; a Chartered Accountant before the Adjudicating Officer and conceded a stock of Rs.10 crores. It is based on this that the assessment was completed. 4. In any event, there is no procedure by which WPC.No.4727/2017 : 3 : an inspection could have been carried out through another Inspector after the survey and during the course of assessment. The Assessing Officer unnecessarily gave a handle to the assessee to challenge the assessment proceedings on that ground. The inspection subsequently conducted and the report filed, is not one permitted by statute. There can be no reliance placed on it to interfere with Ext.P8 under Article 226. 5. It is also to be noticed that after a voluntary statement made under Section 131 before the Adjudicating Officer, the petitioner has challenged the same with a statement of stock as produced at Ext.P5. The inspection conducted by the Inspector deputed by the Assessing Officer was subsequent to the survey and in the course of WPC.No.4727/2017 : 4 : the assessment proceedings, during which period the assessee could very well have removed the items which were in his establishment. In such circumstance, this Court does not find any warrant to rely on a report of a subsequent inspection conducted, which was absolutely unwarranted. 6. The petitioner hence would be left remedy to appeal against the assessment order. The appellate authority would decide the issue untrammelled by the observations made herein but however not placing any reliance on the inspection report. Writ petition is disposed of. No costs. Sd/= (K. VINOD CHANDRAN, JUDGE) jma //true copy// P.A to Judge "