Commissioner of Income Tax-II vs. M/s Transport Corporation of India

2025:CGHC:13145

NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPT No. 132 of 2014 Chhattisgarh Steel Castings Pvt. Ltd., Registered Office 33/C LIA, Bhilai, Chhattisgarh

... Petitioner(s) versus The Commissioner of Income Tax, Civil Line, Raipur, Chhattisgarh

... Respondent(s) For Petitioner(s) : Mr. M. C. Jain, Advocate. For Respondent(s) : Mr. Ajay Kumrani, Adv on behalf of Mr. Amit Chaudhari, Adv. SB : Hon'ble Shri Justice Deepak Kumar Tiwari Order

on Board

19.03.2025 1. This petition has filed under Article 226/227 of the Constitution of India assailing the order dated 05.03.2014 passed by the Commissioner of Income Tax, Raipur under Section 264 of the Income Tax Act 1961 (for short the "Act 1961"), whereby, the revision preferred by the petitioner herein was dismissed. 2. Facts of the case are that the Petitioner/Assessee is engaged in the business of manufacturing of CTD bars, Rounds, M.S. Ingots etc. During the assessment year 2009-10, the Assessing Officer has passed an order under Section 143 (3) of the Act 1961 on 31.12.2011 and assessed loss of Rs.3,49,46,476/- though the Assessee company has filed return showing total loss of Rs.4,09,13,490/-. During the course of verification of books Digitally signed by AJAY KUMAR DWIVEDI Date: 2025.03.22 11:24:33 +0530

2 of accounts and records, it was noticed that there has been survey operation conducted by the Central Excise Authority on 22.10.2008 wherein it was found that there was shortage of closing stock of finished goods at 171.05 metric tonnes (MT) and raw material of 45.655 MT and the concerned Authority has worked out the under valuation at Rs.57,41,853/-. The Assessing Officer also found that the Assessee Company has not mentioned the said difference in stock in its books and thus the aforesaid amount was added to the total income of the assessee and for furnishing inaccurate details of income, penalty proceedings under Section 271 (1) (c) of the Act 1961 was separately initiated against the petitioner. The Assessee Company has not filed any appeal against the assessment order and filed revision under Section 264 of the Act 1961. In the said revision, the petitioner/Assessee has raised a ground that in making addition to Rs.57,41,353/- to the total income of the assessee for alleged shortage of stock found at the time of survey by Central Excise Authority is unjust and bad in law and at the most GP, if any, could be added and not the amount of whole shortage worked out by the Excise Authorities. However, learned Revisional Authority has not accepted the said grounds and dismissed the revision petition. 3. Learned counsel for the appellant would submit that the Revisional Authority has passed a non speaking order. He would further submit that though various case laws have been cited which were referred by the Revisional Court, but the ratio laid down in the said decisions has not been applied in proper perspective. He submits that in a catena of decisions it has been held that entire sale could not be added in the

3 income of assessee if there is shortage of stock found during the survey and addition can be made only to the extent of estimated profit embedded in sale for which net profit rate ought to be adopted. Learned counsel also places reliance in the matter of B. & Bros. Engineering Works Vs. Dy. C.I.T. Income Tax (2003) 84 I.T.D. 243 (Ahd.) (T.M.)/(2003) 78 TTJ (Ahd) (TM) 876; CIT Vs. Balchand Ajit Kumar (2003) 263 ITR 610 (MP); Oriental Electronics Patiala Vs. Dept. of Income Tax [ITA No.211/Chd/2011 Order dated 25.04.2012 decided by ITAT 'A' Bench Chandigarh]; Janta Tiles Vs. ACIT (2000) 66 TTJ (Pune) 695; CIT Vs. President Industries (2000) 158 CTR (Guj) 372; Nankiram S Jhamtani, Ahmedabad vs. Dept. of Income Tax (ITA No.897 (Ahd.)/2009 order dated 17.01.2011). On the basis of above submission, learned counsel for the petitioner prays to quash the impugned order dated 05.03.2014. 4. On the contrary, learned counsel for the respondent would support the impugned order. He submits that though the Assessee has not availed the remedy of appeal and after dismissal of revision preferred the writ petition, however, in the writ jurisdiction the scope of interference is very limited. He further submits that in the proceedings, there was substantial compliance of natural justice as show cause notice was issued to the Assessee and he has failed to offer any satisfactory explanation regarding the shortfall in closing stock and raw material. He submits that the competent Authority was having complete jurisdiction to pass the order impugned. Therefore, in the writ jurisdiction this Court should not reassess the fact and evidence of the case. In support of his contention,

4 he also places reliance in the matter of Unisource Hydro Carbon Services (P.) Ltd. Vs. Union of India (2022) 139 Taxman.com 411 (Culcutta). He also submits that in the cases upon which counsel for the petitioner has placed reliance, no case has been cited by the petitioner wherein any relief has been granted by the High Court against the revisional order. Therefore, the said case laws are distinguishable on facts and are of no help to the petitioner. 5. Heard learned counsel for the parties and perused the documents annexed with the petition. 6. Admittedly, the petitioner has not filed proper income tax return for the Assessment Year 2009-10 and shown the total loss at Rs.4,09,13,490/-. The Assessing Officer while passing the order dated 31.12.2011 under Section 143 (3) of the I.T. Act 1961 on the basis of survey conducted by the Excise Authority found that the valuation of the stock at Rs.57,41,353/- has not been mentioned in the books of account of the petitioner. So the Assessing Officer has added the said income and the petitioner has also admitted the same before the Excise Authority. So the petitioner Company has not mentioned the difference of stock of Rs.57,41,353/- in their books of accounts. Further, in spite of issuance of notice by the Department of the Assessment proceedings the petitioner failed to offer any satisfactory explanation. The petitioner has also not preferred any appeal against the assessment order and only preferred revision petition under Section 264 the Act 1961.

5 7. Further, while dismissing the revision, the Revisional Authority has noted that the petitioner/Company has not submitted any satisfactory explanation regarding the discrepancy at the time of assessment proceedings or at the time of penalty proceedings. It was found that discrepancy of stock found at the time of Central Excise survey was accepted by the petitioner Company as the sales outside books of accounts and the petitioner has also paid excise duty on that amount. It was further noted that entire sale done outside books of accounts is income to be added, as the raw material cost has been accounted for in the regular books of accounts. Thus the petitioner's contention that only GP should be added to income could not be accepted. It is settled that penalty proceedings are separate from assessment proceedings and, therefore, filing of revision petition under Section 264 of the Act 1961 against quantum addition would not be of any help to the petitioner in the Appellate proceedings against the penalty under Section 271 (1) (c) of the Act 1961. 8. Considering the scope of writ jurisdiction and the fact that the petitioner has failed to establish any violation of natural justice or competency of jurisdiction, this Court is not inclined to interfere with the aforesaid findings recorded by the Revisional Authority. 9. Consequently, the petition fails and is hereby dismissed. Sd/-

(Deepak Kumar Tiwari) Judge Ajay