Itc/1/2011 Of M/S.sri Mahalakshmi Book Enterprises v. The Commissioner Of Income Tax

THE HON’BLE SRI JUSTICE V.V.S.RAOAND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN I.T.C. No.1 OF 2011 Date:07.04.2011 Between:M/s.Sri Mahalakshmi Book Enterprises,Vijayawada .. Petitioner And The Commissioner of Income Tax,Vijayawada .. Respondent THE HON’BLE SRI JUSTICE V.V.S.RAOAND THE HON’BLE SRI JUSTICE RAMESH RANGANATHAN I.T.C. No.1 OF 2011 ORDER:(Per Hon’ble Sri Justice V.V.S.Rao) The petitioner, a book seller (novels and story books), filed theirreturn for the assessment year 1987-1988 declaring an income ofRs.97,000/-. In August, 1986 survey operations, under Section 133A ofthe Income Tax Act, 1961 (the Act, for brevity), were conducted. Theinventory prepared in the survey revealed that there was stock worthRs.9,55,123/-. Therefore the assessing officer completed assessmentunder Section 143(3) of the Act making an addition of Rs.2,31,398/-towards suppression of profit from out of the closing stock. The petitionerappealed. The Appellate Commissioner reduced the addition toRs.1,51,398/-. The petitioner then approached the Income Tax AppellateTribunal. Though the levy of interest under Section 217(1) of the Act wasremitted to the Appellate Commissioner, the learned Tribunal confirmedthe order. The petitioner then took out an application, beingR.A.No.26/Vizag/1998, under Section 256(1) of the Act requesting that areference be made to this Court under the said provision. The saidapplication, having been dismissed by the impugned order, the presentpetition is filed under Section 256(2) of the Act. The counsel for the petitioner submits that Section 69A of the Act,which deals with undisclosed income, has no application to the facts ofthe case, but the assessing officer and the appellate authority wronglyapplied the said provision. He nextly contends that the book stockavailable on the date of survey is the stock which was returned by theretailers; in the publishing business it is treated as dead stock; and,therefore, no value can be notionally taken with reference to the stock orthe normal profit as was done by the assessing officer. We have perused the impugned order. The question ofapplicability of Section 69A of the Act was not one of the questions whichthe petitioner wanted the learned Tribunal to refer to this Court -obviously the submission now made is an after thought. Secondly aperusal of the order of the Appellate Commissioner would show that the representative of the petitioner admitted that, in the line of businesscarried on by the petitioner, the normal profit would be around 30%. Itappears the assessing officer assumed that the profit with reference tothe book stock was not shown in the return and was suppressed and,therefore, an addition was made which stood reduced by the AppellateCommissioner. As rightly observed by the learned Tribunal it is a merequestion of fact, and is not a question of law that was required to bereferred to this Court under Section 256(1) of the Act. The petition is, accordingly, dismissed. There shall be no orderas to costs. ________________ (V.V.S. RAO, J) _____________________________ RAMESH RANGANATHAN, J 07.04.2011 KH