Itta/80/2004 Of Late Haricharan Agarwal v. The Commissioner Of Income Tax

THE HON’BLE SRI JUSTICE L.NARASIMHA REDDYANDTHE HON’BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.80 of 2004 JUDGMENT:(per the Hon’ble Sri Justice L.Narasimha Reddy) The appellant is a proprietor of Dhulichand Textile Mills. In thecourse of search and seizure conducted under Section 132(4) of theIncome Tax Act, 1961 (for short ‘the Act’) on 13.07.1994, it was noticedthat stock worth Rs.6,40,000/- was found in the business premises ofM/s. Venkateswara Balaji Textiles and stock worth Rs.4,00,000/- wasfound in unmanned godown. The appellant explained that to be theincome from other concerns. In compliance with the notice issuedunder the relevant provisions of the Act, the appellant submitted hisreturn for the Assessment Year 1995-96. However, he claimeddeduction of those two amounts under Section 80HH and 80I of theAct. The Assessing Officer did not allow such deductions. Aggrievedby the order of assessment, the appellant approached theCommissioner of Income Tax (Appeals-II), Hyderabad. The appealwas allowed through order dated 23.06.1998. The Revenuechallenged the order of the Commissioner by filingI.T.A.No.660/Hyd/1998 before the Hyderabad Bench ‘B’ of the IncomeTax Appellate Tribunal. The appeal was allowed through order dated25.06.2003. Hence, this further appeal under Section 260A of the Act. Heard Sri Venkat Ram Reddy, learned counsel for the appellantand Sri S.R.Ashok, learned counsel for the respondent. It is not in dispute that stocks worth Rs.6,40,000/- andRs.4,00,000/- were found in the course of search and seizure and theappellant did not disown them. The explanation, however, at therelevant point of time, was that the amount was derived from “othersources”. However, in the return, claim was made for deduction underSections 80HH and 80I of the Act. No material, as such, was placedbefore the Assessing Officer to establish that the amount representing the value of the goods has been earned as profit from an industry thatqualifies under Sections 80HH and 80I of the Act. In the appealpreferred before the Commissioner, vague and uncertain observationwas made to the effect that the ratio of the judgment of the AmritsarBench of the Income Tax Appellate Tribunal covers the issue. Noattempt was made to cover the basic issue as to whether the appellanthas proved that it has established an industry in the backward areaand other facts mentioned in sub-Section (2) of Section 80 HH of theAct. It is only when the various facets mentioned in sub-Section (2) ofSection 80HH of the Act are proved, that the profit derived from suchan industry can be allowed for deduction. The Tribunal took note ofthis glaring deficiency on the part of the appellant and allowed theappeal preferred by the Revenue. We do not find any basis to interferewith the order under appeal. The appeal is accordingly dismissed. There shall be no orderas to costs. The miscellaneous petitions filed in this appeal shall also standdisposed of. ___________________________ L.NARASIMHA REDDY, J Date: 10.12.2014va ____________________________ CHALLA KODANDA RAM, J