B.s. Rana (Deceased) Through His Lrs v. Commissioner Of Income Tax, Jalandhar

ITA No. 344 of 2005 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 344 of 2005 Date of Decision: 14.10.2010 B.S. Rana (deceased) through his LRs ....Appellant. Versus Commissioner of Income Tax, Jalandhar ...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. Vivek Sethi, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This appeal was admitted by this Court vide order dated4.5.2006 for determination of the following substantial question of law:- “Whether the order of the Tribunal is perversewhereby addition of Rs.2,73,000/- made on accountof excess consumption of furnace oil has beenupheld without there being any material?” 2.Put shortly, the facts of the case as pleaded in the appeal are that the assessee is carrying on the business of manufacturing andselling malleable iron pipe fittings. On 24.8.1993, a survey wasconducted under Section 133A of the Income Tax Act, 1961 (in short“the Act”) at the business premises of the assessee and the financialyear was divided by the Assessing Officer into two parts, i.e pre-survey period from 1.4.1993 to 23.8.1993 nearly five months and the post-survey period from 21.8.1993 to 31.3.1994 nearly seven months. Theassessee also surrendered income of Rs.3,25,000/- on account ofexcess stock and the Assessing Officer made additions of Rs.1,49,590/-on account of bogus purchases and Rs.2,73,000/- on account of excessconsumption of furnace oil. Against the aforesaid additions made bythe Assessing Officer, the assessee took the matter in appeal beforethe Commissioner of Income Tax (Appeals) [in short “the CIT(A)”] whovide order dated 23.12.1997 upheld the view of the Assessing Officer.On further appeal by the assessee before the Income Tax AppellateTribunal, Amritsar Bench, Amritsar (hereinafter referred to as “theTribunal”), the Tribunal vide order dated 19.1.2005 affirmed the ordersof the CIT (A) as well as the Assessing Officer. Hence, the presentappeal by the assessee. 3.We have heard learned counsel for the parties. 4.The solitary point that needs determination by this Court iswhether the authorities below had rightly made addition of Rs.2,73,000/-in the income of the assessee on account of excess consumption offurnace oil which was not disclosed in the books of account of theassessee. 5.The Tribunal while concurring with the view of theAssessing Officer and the CIT(A) upholding the addition ofRs.2,73,000/- had recorded as under:- “The next ground of the assessee's appeal relates tosustaining of an addition of Rs.273000/- made onaccount of excessive consumption of furnace oil.The facts of the case are that the AO observed that 3.We have heard learned counsel for the parties. 4.The solitary point that needs determination by this Court iswhether the authorities below had rightly made addition of Rs.2,73,000/-in the income of the assessee on account of excess consumption offurnace oil which was not disclosed in the books of account of theassessee. 5.The Tribunal while concurring with the view of theAssessing Officer and the CIT(A) upholding the addition ofRs.2,73,000/- had recorded as under:- “The next ground of the assessee's appeal relates tosustaining of an addition of Rs.273000/- made onaccount of excessive consumption of furnace oil.The facts of the case are that the AO observed that prior to survey, the assessee was purchasing only 12M.T. of furnace oil every month. However, the AOobserved that after the survey, purchases of furnaceoil increased from 24 M.T. to 36 M.T. In all theassessees purchases were to the tune of 144.8 M.T.in the post survey period. The assessee wasconfronted with these facts and asked to furnish thedetails of opening stock of the furnace oil. However,the assessee gave a vague reply without explainingthe reasons for substantial increase in purchases ofpre-survey period and also failed to furnish thedetails of opening stock of the furnace oil. The AOalso compared the case of the assessee with that ofM/s New Metal Works and found that purchases ofcoal and fuel worth Rs.160022/- has been shown bythat concern for total sales of Rs.8030571/-. Asagainst the same, the assessee has shownpurchases of Rs.1225394/- for making total sales ofRs.8591274/-. He also referred to the A.Y. 1993-94and found that M/s New Metal Works has shown totalpurchases of Rs.210291/- for making sales ofRs.8654501/-. Thus, he observed that the assesseehas shown quantum jump in the purchases of thecoal and fuel in the subsequent period. Taking intoaccount, the opening stock found on the date ofsurvey and purchases made during the surveyperiod, the AO worked out the total quantity ofpurchases at 146200 Ltrs. after reducing the quantityof closing stock of 16700 Ltrs. Taking into accountthe average consumption of 12 M.T. of furnace oilper month in the pre-survey period, the AO workedout the excess quantity of consumption of fuel at45500 kgs. Taking the rate at Rs.6/- per kg. the AOmade an addition of Rs.273000/- being excessconsumption of fuel oil.” 6.The aforesaid concurrent finding of fact recorded by theauthorities below could not be shown to be perverse or erroneous inany manner by the learned counsel for the assessee except that anattempt was made by him for reappreciation of evidence which is notpermissible. As noticed earlier, all the three authorities haveconcurrently come to the conclusion that in the stock of consumption offurnace oil in the pre-survey period as compared to post-survey periodthere was substantial difference and the assessee could not offer anysatisfactory explanation for the said difference. Once that was so, theaddition made by the Assessing Officer and sustained by the appellateauthorities cannot be faulted. 7.In view of the above, the substantial question of law isanswered against the assessee. 8. Consequently, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE October 14, 2010gbs (ADARSH KUMAR GOEL)JUDGE