SRI M L KRUPAL vs. THE INCOME-TAX OFFICER

SUVINA KRUPAL W/O LATE SRI. M.L. KRUPAL,

EMAMI M.K. D/O LATE SRI. M.L.KRUPAL,

Heard Sri V.Chandrasekhar, learned advocate for the appellants and Sri K.V.Aravind, learned Standing Counsel for the respondent.

Brief facts of the case are, assessee filed his returns for the Assessment Year 2006-2007. The Assessment Officer passed his order dated 21.12.2011. Assessee challenged the said order before CIT (Appeals). The CIT (Appeals) partly allowed the appeal vide order dated 06.02.2013. On further appeal, the Income Tax Appellate Tribunal (‘ITAT’ for short) in ITA 87/Bang.2009 vide order dated 26.06.2009 restored the matter to the file of Assessment Officer with a direction to redo the assessment after considering assessee’s submissions. After the remand, the Assessment Officer held that there was inflated purchase of Rs.82,69,825/- and held the said amount as taxable income. The assessee challenged the same before the CIT (A) and the CIT (A), vide order dated 06.02.2013 dismissed the

Sri Chandrasekhar, for the appellant firstly submitted that the Tribunal was not justified in holding that the assessment order dated 21.12.2011 passed after the remand is not barred by limitation. In support of his contention, he placed reliance on ASSISTANT COMMISSIONER OF INCOME TAX vs. C.N.ANANTHRAM, 266 ITR 470 and argued that any order passed under Section 254(2) of the Income Tax Act, 1961 either allowing the amendment or refusing to amend gets merged with the original order passed under Section 254(1).

Sri Aravind, for the Revenue submitted that Section 254(2) of the Income-tax Act ('Act' for short) has been substituted w.e.f. 01.06.2016 by Finance Act 2016. That prior to the substitution, the limitation period was four years. On the facts of this case,

We have carefully considered rival contentions and perused the records.

We may record that Section153(2)A of the Act mandates that in relation to assessment commencing from 01.04.1971, an order of fresh assessment in pursuance of order under Section 254 of the Act setting aside the assessment may be made at any time before expiry of one year from the end of financial year in which the order under Section 254 of the Act is received by the Chief Commissioner.

In the instant case, the ITAT has pronounced its order on 26.06.2009. The financial year end relevant to that date is 31.03.2010. One year there from would expire on 31.03.2011. According to

As recorded herein above, the Tribunal in its rectification order dated 06.08.2010 has, on facts, enlarged the earlier order of remand. Therefore, the date to be reckoned must be 06.08.2010 and the relevant assessment year would be 2010-2011. In view of the express order that the earlier order stood enlarged, the contention urged with regard to first substantial question of law in the facts and circumstances of this case must fail.

With regard to the second substantial question of law, the assessee’s case is that ITAT has not considered assessees explanation and the documents with regard to alleged unaccounted purchase.

We have carefully gone through the assessment order. The Assessing Officer has recorded in para 1 of his order that the actual purchase for the relevant year is Rs.31,56,31,439/- and the actual sale as per the impounded books is Rs.31,83,86,825/-. According to the Assessment Officer Rs.82,69,825/- is taxable income.

Sri.Chandrashekar, rightly contended that the difference in the cost of purchase and sale as per the Revenue cannot be treated as taxable income because only the gross profit arising out of the difference is the taxable income.

According to the Revenue, the figures of purchase and sales recorded in the impounded books, are Rs.31.56 crores and Rs.31.83 crores respectively. If this is taken into consideration, the profit will have to be the difference between the two figures. However, the assessing officer has held Rs.85.31 lakhs as taxable

In view of our finding on the second substantial question of law, the third substantial question of law does not survive for consideration.

In the light of above discussion, the first substantial question of law is held against the assessee and in favour of the Revenue and for reasons recorded herein above, the appeal is allowed in part and the matter is remitted to the assessing officer for reconsideration in accordance with law.