Ita/1133/2009 Of Commissionter Of Income Tax v. Premier Steels, Jew Street Ernakulam

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE K.SURENDRA MOHAN WEDNESDAY, THE 8TH SEPTEMBER 2010 / 17TH BHADRA 1932 ITA.No. 1133 of 2009 () ---------------------- ( ITA.1100/COCH/2005 of INCOME TAX APPELLATE,TRIBUNAL, COCHIN BENCH DT.18.6.2008 – ASSESSMENT YEAR 1996-97) .................... APPELLANT/APPELLANT ----------------------------------- THE COMMISSIOENR OF INCOME TAX, COCHIN BY ADVS. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT (S): --------------- PREMIER STEELS, JEWS STREET, ERNAKULAM. R1 BY ADVS. SRI.K.SRIKUMAR SRI.K.MANOJ CHANDRAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 08/09/2010, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: VK C.N.RAMACHANDRAN NAIR & K.SURENDRA MOHAN, JJ. ------------------------------------------- I.T. Appeal No.1133 of 2009 ------------------------------------------- Dated this the 8[th] September, 2010 JUDGMENT Ramachandran Nair, J. The question raised in the department appeal iswhether the Tribunal was justified in confirming thecancellation of the addition of Rs.60 lakhs in theassessment of the respondent - assessee. 2. We have heard the Standing Counsel for theappellant and Adv.K.Srikumar appearing for therespondent. The department has a case that the assesseeinflated sales in the cash book which is substantially atvariance with the sales register, in as much as thedifference in cash received is Rs.10 lakhs each on sixoccasions. Sixty lakhs rupees was deposited by theassessee in the bank account. The Assessing Officer foundthat the figures shown as received in the cash book are notreflected in the corresponding sales register andtherefore, the amount of Rs.60 lakhs was stated as I.T.Appeal No.1133/2008 2 unaccounted cash introduced as business income.However, the First Appellate Authority as well as theTribunal accepted the explanation that emergency cashsales are made for deposit in bank to make payments tosuppliers like SAIL. The contention of the standingcounsel is that the First Appellate Authority as well as theTribunal accepted the explanation without any material toprove the same. Before us, the counsel appearing for therespondent produced documents showing stockmovements and sales made along with the sales taxassessment. 3. After hearing both sides and after going throughthe documents produced, we feel orders were passed bythe First Appellate Authority as well as the Tribunalwithout verifying the records, but by merely accepting theassessee's explanation. If the department's case that thesales register contains the entire details of quantity andthe value for sales made, necessarily, the cash accountedin the cash register should show the full amount received. I.T.Appeal No.1133/2008 3 3. After hearing both sides and after going throughthe documents produced, we feel orders were passed bythe First Appellate Authority as well as the Tribunalwithout verifying the records, but by merely accepting theassessee's explanation. If the department's case that thesales register contains the entire details of quantity andthe value for sales made, necessarily, the cash accountedin the cash register should show the full amount received. I.T.Appeal No.1133/2008 3 The Standing Counsel appearing for the departmentproduced copies of the extracts of accounts taken whichshow corrections in the first two figures. The counselappearing for the respondent-assessee refuted theallegations and contended that the corrections were notmade to introduce any black money in business. Since theTribunal has not verified the stock register or the stockmovement documents to ascertain whether the assesseehad the physical stock as on the dates of the alleged cashsales of Rs.60 lakhs, Rs.10 lakhs each of 6 days, we feelthe matter requires detailed consideration at the hands ofthe Assessing Officer himself. We, therefore, allow theappeal by setting aside the orders of the Tribunal and theFirst Appellate Authority and remand back the matter tothe Assessing Officer for the assessee to establish theclaim of stock availability, cash sales, payment received,monthly returns filed and payment of sales tax withrelated documents. If the assessee proves the transactionsbefore the Assessing Officer, that stocks were available for I.T.Appeal No.1133/2008 4 making the cash sales and that there were cash sales overand above the cash sales found by the department in thesales register, then the Assessing Officer delete theaddition or otherwise sustain the addition. C.N.RAMACHANDRAN NAIR JUDGE K.SURENDRA MOHAN JUDGE css/