Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. M/S Somani Industries, A

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 49 / 2003 Commissioner of Income Tax, Jaipur-II, Jaipur. ----Appellant Versus M/S Somani Industries, A-85, Road No.9, VKI Area, Jaipur. ----Respondent _____________________________________________________ Counsel For Appellant(s) :Mr. K.D. Mathur on behalf of Mr. R.B. Mathur. Counsel For Respondent(s) :Mr. P.K. Kasliwal. _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHURJudgment Per Hon’ble Jhaveri J.03/01/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal hasallowed the appeal preferred by the assessee for statisticalpurposes. 2.This Court while admitting the appeal on 20.5.2004 hasframed following substantial questions of law: “1.Whether in the facts and circumstances ofthe case the ITAT was justified in law in deletingthe additions of Rs.92,630/- made on account ofloose soap bricks found unrecorded during thecourse of search? 2.Whether in the fact and circumstance ofthe case the ITAT was justified in deleting theaddition of Rs.3,75,94,225/- on account of suppressed sales? 3.Whether in the fact and circumstance ofthe case the ITAT was justified in not consideringthe amendment made with retrospective effectfrom 01.07.1995 in Section 158BB of the Act? 4.Whether in the fact and circumstance ofthe case the ITAT was justified in law in notaccepting the statement of Accountant recordedu/s.132(4) of the Act and which are havingbinding value? 5.Whether in the fact and circumstances ofthe case the ITAT has not acted perversely inallowing Misc. Application of the assessee muchbeyond the scope of section 254 and that toowithout assigning any reasons?” 3.The brief facts of the case are that assessee was one of the concerns belonging to SOMANI GROUP. In this Group, searchunder Section 132 of the Income Tax Act, 1961 was mounted on12.01.1999. The assessee is engaged in the business ofmanufacturing and dealing in soaps in the brand name of“MAHARAJA”. As on the date of search, the firm was constitutedby three partners namely Shri Jagdish Somani, Shri BalkishanSomani & Smt. Ramswaroopidevi having 1/3 share inprofit/losses. Search under Section 132 was conducted on12.01.1999 and concluded on 13.01.1999 wherein variousassets were found and seized. Notice under Section 158 BC wasissued on 29.02.2000 and served on the assessee on03.03.2000, requiring the assessee to file return of income forthe block period within 30 days of the service of the said notice.The return of income for the block period was filed on13.04.2000 declaring undisclosed income at Rs. NIL. The returnfiled is beyond the time given in the notice under Section 158 BC. The case was taken up for scrutiny by issuing notice undersection 143(2) dated 18.12.2000. 4.Counsel for the respondent has contended that the issuebetween the parties is squarely covered by the decision of thisCourt in the case of Commissioner of Income Tax, Jaipur vs.Smt. Radha Bajaj in DB Income Tax Appeal No.65/2000 alongwith other connected matters, decided on 14.09.2016, which reads as under: “1. By way of these appeals, theDepartment has challenged the judgmentand order of the Tribunal whereby theTribunal has dismissed the appealspreferred by the Department and allowedthe appeals preferred by the assesseeagainst the order of the CIT (A) wherebythe CIT (A) has partly allowed the appeal ofthe assessee. The cross-objections havealso been filed by the respondent-applicant.Since controversy raises identical questionsof law and facts, all these cases are decidedby this common judgment and order. reads as under: “1. By way of these appeals, theDepartment has challenged the judgmentand order of the Tribunal whereby theTribunal has dismissed the appealspreferred by the Department and allowedthe appeals preferred by the assesseeagainst the order of the CIT (A) wherebythe CIT (A) has partly allowed the appeal ofthe assessee. The cross-objections havealso been filed by the respondent-applicant.Since controversy raises identical questionsof law and facts, all these cases are decidedby this common judgment and order. 2.The facts giving rise to the appealsare that for the assessment years 1989-90and 1997-98, block asseement year, theAssessing Officer has passed an orderagainst the present respondent-assesseeand estimated his income for the blockassessment year. The operative part of theorder reads as under: “Accordingly Rs. 29,28,920/- aretaken as undisclosed income of theassessee on account of interest income onundisclosed advances of Rs. 42,34,000/- Asstt. Year Undisclosed income 92-93Rs. 8,81,016/- 93-94Rs. 10,40,675/- 94-95Rs. 10,14,844/- 95-96Rs. 9,91,147/- 96-97Rs. 13,18,900/- Rs. 3,60,000/- 97-98Rs. 11,40,088/-Rs. 16,37,440/- 98-99 (i.e. 1.4.97 to Rs. 3,45,475/-17.9.97)Rs. 9,31,480/- TotalRs. 96+,61,065/- The income of the assessee for the blockperiod is therefore, assessed at Rs.96,61,065/- on which tax @ 60% comes toRs. 57,96,639/-. Issue demand notice andchallan. Also charge interest u/s 158BFA(1).Penalty proceedings for levy of penalty u/s158BFA(2) are being initiated separately.” 3.Against the said order, an appeal waspreferred and CIT (A) has partly allowedthe appeal preferred by the assessee.Being aggrieved by the same, the assesseehas preferred appeal as well as theDepartment has also preferred the appealwhich was dismissed. Five questions of lawwere framed by the Department which readas under: (1)Whether,inthefactsandcircumstances of the case, the ITAT iscorrect in law in reducing the weight gain insoap manufacturing process from 15% to7.5% without any basis or material onrecord ? (2)Whetherinthefactsandcircumstances of the case, the ITAT wasjustified in interfering with the finding of theA.O. regarding weight gain in soapmanufacturing process which was dulyconfirmed by the CIT (A) and the same wasalso supported by the documentaryevidence as well as practical exercise doneat the time of survey itself ? (3)Whether in the facts andcircumstances of the case, the ITAT wasjustified in setting aside the addition ofinterest income on the ground that it wasnot received whereas the factual positionwas not in dispute that the loan was advanced and the interest income wasundisclosed? (4)Whetherinthefactsandcircumstances of the case, the ITAT wasjustified in setting aside the interest incomewhen the limited dispute before it that itshould be taxed on the accrual or receiptbasis ? (5)Whetherinthefactsandcircumstances of the case, when theassessee is maintaining books of accountson mercantile basis then the interest shouldbe calculated on accrual or receipt basis ? 3.1While admitting the appeal, nosubstantial question of law was framed andcross-objections have also been preferredby the assessee. 4.We have heard the learned counsel forthe parties. 5.Mr. Mathur has contended that theAssessing Officer after considering theevidence on record and the statementrecorded and documents which wererecovered during the search which wereloose papers and on the basis of that theassessment was made on the basis of 15%.C.I.T. (A) has also gone into details andafter considering, therefore, the Tribunalhas seriously committed an error inallowing the ground No.1 and reasoningwhich are adopted from 1 to 3 areerroneous. 3.1While admitting the appeal, nosubstantial question of law was framed andcross-objections have also been preferredby the assessee. 4.We have heard the learned counsel forthe parties. 5.Mr. Mathur has contended that theAssessing Officer after considering theevidence on record and the statementrecorded and documents which wererecovered during the search which wereloose papers and on the basis of that theassessment was made on the basis of 15%.C.I.T. (A) has also gone into details andafter considering, therefore, the Tribunalhas seriously committed an error inallowing the ground No.1 and reasoningwhich are adopted from 1 to 3 areerroneous. 6.Counsel for the respondents hascontended that the view taken by theTribunal is just and proper and even theprofit which has been estimated 7.5%required to be reduced to 6.48%. 7.The Tribunal while considering thereasoning in paragraph 13, held as under: “After due consideration of facts, we do notfind much credibility in the report of ShriS.C. Singhal. Further, the publication ofRajasthan Chamber of Commerce givinginformation about soap manufacturing isalso distinguishable for the reasons that thequality of soap covered by the publication isdifferent from the quality of soapmanufactured by the assessee. This isevident not only from the comparative sales prices between the component mix of thetwo. In so far as the report of RajasthanConsultancy Organisation Ltd. Is concerned,we find that the organisation is sponsoredby several Financial Institutions/Banks andall are public sector undertakings. Thus,this report is more credible/reliable.Moreover, the report is based on inspectionof assessee’s place and actual physicalverification of process and production. Wedo not accept the contention of the Id. D/Rthat this report should not be believed.However, considering the facts and saidreport, we hold that it would be fair andreasonable if the weight gain is adopted at7.5% in the case of appellant. The AO hasprepared the calculation of undisclosedincome at page 19 of assessment order in atable taking the weight gain at 15%. Wehereby direct the AO to recalculate theundisclosed income by adopting 7.5% inplace of 15% in the said table. We holdaccordingly.” 8.In our view, the view taken by theTribunal is just and proper and nointerference is called for. The substantialquestions which have been raised, in ouropinion, are appreciation of evidence of lawon the basis of evidence on record. 9.In that view of the matter, all theissues are answered in favour of theassessee against the Department. 10.The appeals of the Department aredismissed. The cross-objections also standdisposed of accordingly. 5.In that view of the matter, the issue is answered in favour of the assessee and against the department. 6.The appeal stands dismissed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J.