Victory Mills V. Commissioner of Income-Tax, Patiala

ITA/260/2004

AI Insights

The case involves M/s Victory Mills, the appellant, contesting an order by the Income Tax Appellate Tribunal, Chandigarh, which restored additions made by the Assessing Officer to the appellant's declared income for the assessment year 1995-96. The additions were based on findings that the appellant had under-billed transactions and that the books of account were not reliable. The Tribunal's decision was based on evidence from a seized diary during a search operation, which indicated that the appellant had sold rice bran at a higher price than recorded. The High Court of Punjab and Haryana, after hearing the arguments, upheld the Tribunal's decision, dismissing the appeal.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 677924 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 13-12-2010
• Assessment Year: misc
• Other Referred Cases: ITO V Sachdeva Traders, Rajpura in ITA No.32/Chandi/99 for assessment year 1995-96
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: TEJINDER JOSHI
• Assessee Lawyers: PANKAJ JAIN
• Keywords: Reliable books of account; Unaccounted income; Under-billed transactions; Estimation of understatement of sale proceeds
• Section: 260A

Judgement Text

"Income-tax Appeal No. 2 60 of 2004 -1- **** IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Income-tax Appeal No.260 of 2004 Date of decision: 13.12.2010 M/s Victory Mills ...Appellant Versus Commissioner of Income-Tax, Patiala ...Respondent CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY KUMAR MITTAL Present: Mr. Pankaj Jain, Advocate for the appellant. Mr. Tejinder K. Joshi, Advocate for the respondent. **** ADARSH KUMAR GOEL, J ( Oral) . This appeal has been preferred under Section 260A of Income Tax Act, 1961 (hereinafter referred to as 'the Act”) proposing following substantial question of law arising out of order dated 17.2.2004 of the Income Tax Appellate Tribunal, Chandigarh Bench (hereinafter referred to as “the Tribunal”) passed in ITA No.155/Chandi/99 in respect of assessment year 1995-96:- “Whether under the facts and circumstances of the case, the Tribunal was justified in reversing the findings of the Commissioner of Income Tax (Appeals) who had deleted the addition of Rs.1,49,557/- made by Assessing Authority which was based on no evidence or material to Income-tax Appeal No. 2 60 of 2004 -2- **** prove any excess price as alleged was charged by the appellant for recorded sales and hence the findings of Tribunal are perverse?” As a result of search on the business premises of M/s Partap Bhangu Solvex (P) Ltd., village Pasiana, a diary showing unaccounted purchases from various concerns, including the assessee was seized. On being confronted with the said material, the assessee surrendered unaccounted income of Rs. 4 Lacs. During the assessment the assessing officer made additions to the declared income holding that the assessee had under-billed transactions and its books of account were not reliable. The addition represented difference in declared sale price and the actual sale price. The CIT(A) set aside the additions but the Tribunal restored the same. Dispute surviving in this appeal relates to addition of Rs.1,49,557/-. In this regard, the Tribunal observed:- “As regards allowing a relief of Rs.1,49,557/- on account of understatement of sale proceeds of rice bran, we find that the assessee has been understanding the sale consideration. This fact is admitted by the ld. CIT(A) himself. In fact, the details recorded in the seized diary indicated that the assessee and its sister concern had sold rice bran @ Rs.330 per qtl. The issue is about estimation of understatement of sale proceeds on the sale of rice bran. Similar issue came before us in the Income-tax Appeal No. 2 60 of 2004 -3- **** case of ITO V Sachdeva Traders, Rajpura in ITA No.32/Chandi/99 for assessment year 1995-96 which was heard on 4.4.03 and decided on 6.4.03. We find that the same ld. CIT(A) has upheld the addition by applying sale rate of Rs.330 per qtl. by referring to the cases of Sunil Traders, Rajpura, S.K.Traders and Shakti Traders. We have already upheld the order of ld. CIT(A) in applying a rate of Rs.330. Therefore, we do not find any justification of applying a lower rate than wheat was applied in the case of Sachdeva Traders. Respectfully following our order dated 6.4.03 in the case of ITO V. Sachdeva Traders for assessment year 1995-96, we are of the opinion that the ld. CIT(A) was not justified in allowing relief on this ground. We set aside the order of ld. CIT(A) and restore that of the AO. This ground of appeal is allowed”. We have heard learned counsel for the parties. Learned counsel for the assessee submitted that it could not be presumed that sale consideration in seized diary was correct one. We are unable to accept the submission. A perusal of the above findings shows that the sale price of rice bran recorded in the books of account was not found to be genuine and actual sale price was found to be higher which rate was also adopted in another case mentioned therein. The issue is in the realm of appreciation of Income-tax Appeal No. 2 60 of 2004 -4- **** evidence. The entry and the books of account of the assessee being not reliable, assessment had to be made on estimation. In absence of perversity, the finding recorded by the Tribunal has to be upheld. In view of the aforesaid, question raised is answered against the assessee. Accordingly, the appeal is dismissed. (Adarsh Kumar Goel) Judge December 13,2010 (Ajay Kumar Mittal) Pka Judge "