Commissioner Of Income Tax vs. M/S Manohar Sweets

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MAIT/144/2007HC Madhya Pradesh11 July 2014Author: HON'BLE SHRI JUSTICE RAJENDRA MENON2 pages
For Petitioner: Sanjeev Tuli,S.Lal
AI SummaryDismissed

What did the High Court hold?

The Tribunal held that the addition made by the Assessing Officer was not proper. The Tribunal reasoned that the sole statement of one partner, recorded on January 23, 2001, accepting a 15% suppression for the past 2-3 years, was insufficient to reject the account books. This was particularly so because for the preceding assessment years (1996-97 to 1999-2000), the same account books had been accepted and assessments finalized without any issues. The Tribunal exercised its discretion, finding the account books to be genuine, primarily due to their acceptance in prior years leading up to the survey. The appeal was dismissed as no substantial question of law was involved.

What were the facts?

The Revenue (Commissioner of Income Tax) appealed an order of the Income Tax Appellate Tribunal (ITAT) dated March 16, 2007, which deleted an addition made by the Assessing Officer. The assessee, M/s Manohar Sweets, a partnership firm dealing in sweets and other items, underwent a survey on January 23, 2001. During the survey, a partner, Shri Murli Harwani, stated that 15% of daily sales were not reflected in the account books. Based on this statement, the Assessing Officer disbelieved the account books for assessment year 1996-97 and made an addition of Rs. 23,40,771/-. The ITAT noted that for assessment years 1996-97 to 1999-2000, assessments were finalized based on the same account books without any discrepancies being found.

What were the issues?

1. Whether the Tribunal erred in deleting the addition made by the Assessing Officer based on the statement of one partner, in the absence of corroborating material, for assessment year 1996-97, thereby holding that the account books were genuine? (Question of law) Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the Assessing Officer's addition was justified based on the partner's admission of suppressed sales. The ITAT's deletion of this addition, despite the admission, was incorrect. The Revenue likely contended that the partner's statement constituted sufficient material to disbelieve the account books and make an addition.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

Commissioner of Income Tax Vs. M/s Manohar Sweets 11/07/2014 Shri Sanjay Lal, learned counsel for the appellant. Shri Mukesh Agrawal, learned counsel for the respondent. This is a revenue's appeal under Section 260-A of the Income Tax Act, 1961 calling in question feasibility of an order dated 16.3.2007 passed by the learned Income Tax Appellate Tribunal, Indore Bench in the matter of deleting certain amount, which was assessed towards tax by the Assessing Officer. The Assessee herein carries out business of manufacturing and sale of sweets and certain other items. Its a partnership firm and it is said that the survey was conducted in the premises of the establishment under the provisions of law and in this survey so conducted, one of the partners, Shri Murli Harwani made a statement accepting that 15% of the sale everyday is not reflected in the account book prepared. The proceedings for survey was conducted on 23.1.2001 and for the assessment year in question i.e. for the year 1996-97 onwards even though the account books were submitted, bases on the statement of the partner, the account books were disbelieved and an addition of Rs.23,40,771/- was made by the Assessing Officer. However, the Tribunal found that the sole statement of the partner has been believed, it was recorded on 23.1.2001 and the suppression of 15% indicated by him for the last 2-3 years was considered to be correct for rejecting the account books, which were produced. The Tribunal found that for the same establishment and it's sister concerned, for the assessment year 1996-97, 1997-98, 1998-99 & 1999-2000 in various proceedings held, the assessments were made and all these assessments made based on the account books which were produced and no discrepancy in the same was found.

Commissioner of Income Tax Vs. M/s Manohar Sweets The learned Tribunal held that merely, based on the statement made by one of the partners, in the absence of any material being available to say that the account books were not maintained properly, addition of the amount was not proper and in Paragraph-5, after going into all these questions, the discretion has been exercised by the learned Tribunal to say that the account books seem to be genuine and accepted the same mainly on the ground that for the assessment year 1996-97, right upto 1999-2000 i.e. till a year before the survey took place, the account books were accepted and the assessment finalized. Keeping in view the aforesaid reasons indicated by the Tribunal and finding the same to be reasonable, we see no substantial question of law involved warranting consideration in this appeal.

The appeal is, therefore, dismissed. (Rajendra Menon) (Alok Verma) Judge Judge nd

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