Income Tax Appeal v. M/S Taori Marketing, Nagpur

IN THE HIGH COURT OF JUDICATURE AT BOMBAY, NAGPUR BENCH, NAGPUR INCOME TAX APPEAL NO.50 OF 2015THE COMMISSIONER OF INCOME TAX, NAGPUR-3 V/S M/S TAORI MARKETING, NAGPUR .......................................................................................................................................................Office Notes, Office Memoranda of Coram,appearances, Court orders or directions Court's or Judge's Orderand Registrar's orders Court's or Judge's Order ....................................................................................................................................................... Shri S.N. Bhattad, Counsel for the Appellant.Shri L.S. Dewani, Counsel for the Respondent. CORAM: B.P. DHARMADHIKARI & P.N. DESHMUKH, JJ.DATED: OCTOBER 19, 2015. Heard learned counsel for the respective parties. On 21.9.2015, we have heard the matter andpassed the following order, thus : “Heard for some time. Before proceedingfurther we grant the appellant anopportunity to explain how it hasunderstood reply given by Addressee onquestion no. 7 i.e. details of amountpayable by M/s Taori Marketing toVideocon Industries as on 26.10.2007and details of amount received from theAssessee by it in respect of BBND till26.10.2007. List this matter for further considerationon 5[th] October, 2015.” In response to that order, additional affidavithas been filed by the Inspector of Income Tax Shri DeepakMarotrao Vaidya vide Stamp No.11440 of 2015. According to Shri S.N. Bhattad, learnedcounsel for the appellant, determination of amount ofincome at Rs.4,99,81,800/- on account of stock not inexistence but shown as such by the respondent is supportedby the fact that in Survey on 26.10.2007 physical stockworth Rs.3.33 Crores only could be located while thecontention that total stocks were worth Rs.8.33 Crorescould not verified. The negative profits and failure to supportthese stocks ultimately resulted in rejection of books ofaccount. Opportunity was given to assessee as also tosupplier / dealer M/s. Videocon Industries at Wadi but theycould not produce anything to show investment in stockworth Rs.8.33 Crores. In this situation, common logic thata trader would not sell his commodities at negative pricehas been applied. Shri L.S. Dewani, learned counsel for therespondent, on the other hand relies on order passed by theITAT. He submits that there is nothing on record to doubtbooks of account maintained by assessee. Over flooding of market with electronic items necessitate sell at lower priceand this is supported by the documents. He furthercontends that unfortunately there was fire in establishmentof M/s. Videocon Industries at Wadi shortly after date ofSurvey which destroyed not only stocks but also theirrecords. The said establishment, therefore, could notproduce entire relevant material but then still backed thecase of assessee. He points out that accounts of assessee areduly audited and in this situation mere negative growthcannot be a reason to doubt the same. He points out thatno fabrication as such could be detected by the Authorities. With the assistance of respective learnedcounsel for the parties we have perused the papers, Surveyon 26.10.2007, the availability of accounts and otherdocuments (duly audited) with assessee showinginvestment in stocks worth Rs.8.33 Crores, is not in dispute.Physically, only stocks worth Rs.3.33 Crores could beverified and located in the establishment of assessee atNagpur. His submission that remaining stocks were withM/s. Videocon Industries at Wadi also finds mention. Hehas stated that stocks were billed but not delivered (BBND). The said position is also accepted by M/s.Videocon Industries. In fact, in additional affidavit it ispointed out that learned counsel for assessee had furnishedthe letter dated 30.12.2010 in which it furnished xerox With the assistance of respective learnedcounsel for the parties we have perused the papers, Surveyon 26.10.2007, the availability of accounts and otherdocuments (duly audited) with assessee showinginvestment in stocks worth Rs.8.33 Crores, is not in dispute.Physically, only stocks worth Rs.3.33 Crores could beverified and located in the establishment of assessee atNagpur. His submission that remaining stocks were withM/s. Videocon Industries at Wadi also finds mention. Hehas stated that stocks were billed but not delivered (BBND). The said position is also accepted by M/s.Videocon Industries. In fact, in additional affidavit it ispointed out that learned counsel for assessee had furnishedthe letter dated 30.12.2010 in which it furnished xerox copies of letter and list of BBND and this was as per BBNDlist provided by M/s. Videocon Industries earlier. The fact of fire at establishment of M/s.Videocon Industries is not in dispute. In this situation, the fact of fire is not indispute and list of BBND appliance / commodities suppliedby M/s. Videocon Industries and assessee had validdocuments duly audited supporting assertion that assesseehad invested Rs.8.33 Crores in stocks. Department has notdiscredited theory of over flooding of market by electronicgoods forcing assessee to sell at loss. As such, there was nojustification for rejecting his books of account. The ITAT has rightly applied its mind andaccepted the books of account. We, therefore, find that nosubstantial question of law arises in this appeal. The sameis rejected. JUDGEJUDGE !! BRW !!