Ita/204/2009 Of The Commissioner Of Income Tax v. Kallada Wines, Trichur

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE V.K.MOHANAN FRIDAY, THE 6TH NOVEMBER 2009 / 15TH KARTHIKA 1931 ITA.No. 204 of 2009() --------------------- IT(S&S)A.1/COCH/2002 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT ---------------------------------------- THE COMMISSIONER OF INCOME TAX TRICHUR BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): APPELLANT ------------------------ M/S.KALLADA WINES, S.T.NAGAR, TRICHUR ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 06/11/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: C.N. RAMACHANDRAN NAIR &V.K.MOHANAN, JJ. ---------------------------------------- ITA. No. 204 OF 2009 & C.M.Appl.No.430 of 2009 ---------------------------------------- Dated, the 6[th] November , 2009 JUDGMENT Ramachandran Nair, J. Since the reason for delay in filing the appeal is onaccount of the pendency of the miscellaneous petitionbefore the Tribunal for rectification of the order, wecondone the delay and admit the appeal. 2. The appeal is filed against the order of theTribunal deleting Rs.24,72,170/-, which is a suppressedincome assessed, based on inspection in the assessee'spremises held on 12.12.96. 3. We have heard the Standing Counsel appearingfor the appellant and Sri P.Balakrishnan, counsel appearingfor the respondent. 4. A search was conducted in the assessee's premises. The assessee was engaged in purchase andsale of liquour. Strangely, two sets of accounts were maintained by the assessee, one for brandy sales and otherfor other liquor sales. Even under these two heads, theassessee had two sets of accounts in as much as for brandysales, turnover from April to 31-7-1996, found in thecomputer account was higher by Rs.20,74,344/- over thewritten bills maintained by the assessee. The subsequentunaccounted sales were also found out and the totalunaccounted income was Rs.24,72,170/-. In the blockassessment, this amount was treated as suppressed income.Besides this, the assessee was found to be engaged in saleof liquor under name 'other liquor sales', the accounts ofwhich were found in the computer was also seized. TheAssessing Officer treated this as spurious liquor sales, butgranted deduction of cost of purchase and treated the netamount as suppressed income. In appeal, the Tribunalsustained both additions. However, when the matter wastaken up in appeal in referece to High Court, the High Courtdirected the Assessing Officer to grant deduction of kistpayments. The Commissioner also directed revision of the assessment under section 263 of the IT Act on other matters.The Assessing Officer therefore, issued revised order basedon judgment of the High Court and the order of theCommissioner against which assessee again filed appeal.The Tribunal however, deleted the addition made based onsection 263 order of the Commissioner and even though theaddition on account of suppression of the income frombrandy sale was earlier sustained by the Tribunal in the firstround of appeal, in the second round of appeal theycancelled the addition against which this appeal is filed. After hearing both sides and after going through theTribunal's order, we are of the view that the Tribunal's orderis not tenable because, admittedly, the assessee maintainedtwo sets of accounts in respect of brandy sales which isnothing but sale of liquor purchased from authorisedsources. When the assessee accounts the full saleconsideration in the computer statement, only around 70% ofthe same is accounted in the bills maintained in writing.The difference is nothing but excess price realised over the After hearing both sides and after going through theTribunal's order, we are of the view that the Tribunal's orderis not tenable because, admittedly, the assessee maintainedtwo sets of accounts in respect of brandy sales which isnothing but sale of liquor purchased from authorisedsources. When the assessee accounts the full saleconsideration in the computer statement, only around 70% ofthe same is accounted in the bills maintained in writing.The difference is nothing but excess price realised over the accounted sale price. In the first round, the Tribunalsustained the addition and in the second round of appeal,after remand, the Tribunal cannot take a different stand.Further, on merits, we find no justification in the finding ofthe Tribunal that the assessee has accounted sales in full,when the Department collected two sets of accountsmaintained by the assessee. We therefore, allow the appealby reversing the finding of the Tribunal and restoring theaddition of Rs.24,72,170/- also. No other issue arises in theappeal. The appeal is allowed by reversing the order of theTribunal and by restoring the assessment made with theaddition originally made. C.N.RAMACHANDRAN NAIR JUDGE kvm/- V.K.MOHANAN, JUDGE ITA No.204/09 -:5:- V.K.MOHANAN, J.O.P.No. JUDGMENT