CIT, LUDHIANA vs. M/S SAMBHAV TEXTILES LTD. LUDHIANA

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ITA/61/2010HC Punjab & HaryanaPHHC01093562201013 October 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY KUMAR MITTAL3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal did not raise any substantial question of law. The learned counsel for the appellant (Commissioner of Income Tax) was unable to dispute the correctness of the concurrent finding of the CIT(A) and the Tribunal. Both authorities had concluded that the alleged unaccounted sales, which formed the basis for the addition by the AO, were already covered within the income declared by the assessee. Specifically, the CIT(A) had noted that the sales figure of Rs. 45,19,63,026/- filed with the Registrar of Companies already encompassed the unaccounted sales of Rs. 3,66,70,962/-, and the profit on the ROC sales had been accounted for. Therefore, no separate addition was warranted for the unaccounted sales. The High Court dismissed the appeal on the grounds that no substantial question of law arose from the ITAT's order.

What were the facts?

The appeal was filed by the Commissioner of Income Tax (Appellant) against an order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2005-06. The ITAT had upheld the decision of the Commissioner of Income Tax (Appeals) [CIT(A)] which deleted an addition made by the Assessing Officer (AO). The AO had made an addition of Rs. 52,58,618/- by applying a profit rate of 14.25% to alleged unaccounted sales of Rs. 3,66,70,962/-. The CIT(A) observed that while unaccounted sales were confirmed by the Central Excise Department, the sales figure of Rs. 45,19,63,026/- filed with the Registrar of Companies (ROC) already included these sales. The profit on these ROC sales, amounting to Rs. 1,92,98,200/-, had already been considered as income. Therefore, the CIT(A) concluded that the addition for unaccounted sales was already covered and deleted it.

What were the issues?

1. Whether on the facts and circumstances of the case, the Hon’ble ITAT erred in law in agreeing with the decision of CIT(A) holding that sale of Rs.45,19,63,026/- shown in the return filed with ROC includes the sale of Rs.3,66,70,962/- on which Central Excise Duty was not paid. (Question of law, relating to Section 260-A of the Income Tax Act, 1961). 2. Whether on the facts and circumstances of the case, the Hon’ble ITAT erred in law in not upholding the decision of Assessing Officer relating to calculation of the proportionate profit on sale of Rs.3,66,70,962/- on which Central Excise Duty was not paid. (Question of law, relating to Section 260-A of the Income Tax Act, 1961). Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Appellant (Commissioner of Income Tax) argued that the ITAT erred in law by agreeing with the CIT(A)'s finding that the sales declared with the ROC included the unaccounted sales, and that the ITAT erred in not upholding the AO's calculation of proportionate profit on these unaccounted sales.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 13.10.2010 The Commissioner of Income Tax. -----Appellant. Vs. M/s Sambhav Textiles Ltd. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Denesh Goyal, Advocate for the appellant. --- ADARSH KUMAR GOEL, J.

1.

This appeal has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order dated 29.4.2009 of the Income Tax Appellate Tribunal, Chandigarh in I.T.A. No.1113/Chd/2008 for the assessment year 2005-06 proposing to raise following substantial questions of law:- “1. Whether on the facts and circumstances of the case, the Hon’ble ITAT erred in law in agreeing with the decision of CIT(A) holding that sale of Rs.45,19,63,026/- shown in the return filed with ROC includes the sale of Rs.3,66,70,962/- on which Central Excise Duty was not paid.

2.

Whether on the facts and circumstances of the case, the Hon’ble ITAT erred in law in not upholding the decision of Assessing Officer relating to calculation of the proportionate profit on sale of Rs.3,66,70,962/- on which Central Excise Duty was not paid”

2.

In the course of assessment, the Assessing Officer made addition on the basis of alleged unaccounted sales. On appeal, CIT(A) deleted the addition with the following observations:- “As already mentioned, the Assessing Officer has also made addition of Rs.52,58,618/- by applying rate of 14.25% to the estimated unaccounted sales of Rs.3,66,70,962/-. Here again the facts that the appellant carried out unaccounted sales of knitted fabric is confirmed by the Central Excise Department. Therefore, the appellant carrying out such sales outside the books of account is undisputed facts not controverted even during the appeal proceedings. However, for making the addition of Rs.52,58,618/- the Assessing Officer has estimated both the sales and profit rate. On the other hand, as is clear from the figures given above against sales of Rs.42,68,83,702/- shown in the audited accounts filed with the return of income, the sales have been shown at Rs.45,19,63,026/- in the documents filed with the Registrar of Companies. As the profit on the sales of Rs.45,19,63,026/-

and which came

to Rs.1,92,98,200/- has already been considered as income of the appellant, the sales whatsoever, which have not been accounted for in the sales considered in the audited accounts filed with return of income are taken to be covered in the sales reflected in the Balance Sheet with the Registrar of Companies.

Once income of the appellant had been held to be assessable at Rs.1,92,822,200/- as against that of Rs.9,984/- shown in the return of income, addition of Rs.53,58,618/- with all fairness should be taken to have been covered in the above addition. As such, there is no need to make separate addition of Rs.52,58,618/- and this addition accordingly deleted.”

3.

We have heard learned counsel for the appellant.

4.

Learned counsel for the appellant is unable to dispute the correctness of concurrent finding recorded by the CIT(A) and the Tribunal that the alleged unaccounted sales which were made the basis for addition to the income of the assessee, were already covered by income declared by the assessee.

5.

Thus, no substantial question of law arises.

6.

The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE October 13, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 3

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