M/S Bhatnagar Opticals v. Income Tax Officer, Gwalior

1 HIGH COURT OF MADHYA PRADESHBENCH AT GWALIOR I.T.A. No.39/2013 (Income Tax) M/s Bhatnagar Opticals vs. Income Tax Officer, Gwalior -------------------------------------------------------------------------------------- Shri K.N. Gupta Senior Advocate with R.S. Dhakad,Advocate for the appellant. Shri D.P.S. Bhadoriya with Shri Santosh Jain andShri Anvesh Donderiya, learned counsel for respondent. -------------------------------------------------------------------------------------- CORAM: Hon'ble Shri Justice Sanjay YadavHon'ble Shri Justice S.K. Awasthi -------------------------------------------------------------------------------------- Reserved on : 28.08.2017Date of Decision : 14.09.2017 O R D E R Per Sanjay Yadav, J Present Appeal under Section 260A of the IncomeTax Act, 1961 is directed against the order dated 22.3.2013 passed by the Income Tax Appellate TribunalAgra, Bench Agra in I.T.A. No.488/Agra/2013 in relationto the assessment year 2009-2010. 2.The relevant facts briefly are that in a surveycarried out in the assessee's premises under Section133A of the Income Tax Act, 1961 (hereinafter to bereferred to as “Act of 1961”), it was found that theassessee firm did not maintain any books of accounts ofbusiness, stock register, list of stock was not prepared.Cash of Rs.1,650/- was found. Stock found in thepremises was valued at Rs.7,23,819/-. Machinery use forbusiness of sale of spectacles and contact lens and theair conditioner was also valued. Statement of ShriAnurag Bhatnagar proprietor of assessee firm and ShriKailash Chandra Jain, Accountant of the firm wasrecorded. The closing balance was shown on the date ofsurvey at Rs.10,35,685/- and as the shortage of cashwas not explained addition of Rs.10,34,035/- (1035685-1650) was made on account of unverified cash. Casewas short listed for scrutiny. Return was filed on 3 9.11.2011 disclosing loss of Rs.5,19,316/-. TheAssessment Officer, did not accept the return beingfiled beyond period prescribed under Section 139(1) ofthe Act of 1961. The assessee in response to the noticeretracted his statement of 17.4.2009which was rejectedby the Assessing Officer. For the assessment year 2009-10 the Assessee had disclosed GP rate of 1.24 percentwhereas in the preceding years 2007-08 and 2008-09 hehad disclosed GP rate of 17.75 percent and 17.59 percentrespectively. The Assessing Officer applying multiplierof 5 against the disclosed sales of the assesseeestimated the sales at Rs.60,98,900/- and by applyingprofit rate of 17.72% made the addition of Rs.10,60,725/-.As the belated return was not accepted the loss declaredtherein was taken to be nil. 3.The assessment order dated 29.12.2011 waschallenged in Appeal under Section 143(3) of the Act of1961. The Appeal was partly allowed on 06.07.2012.Commissioner Appeals deleted the addition ofRs.10,34,035/- on account of unexplained cash to be not sustainable. The GP (Gross Profit) was held to beRs.3,40,000/-insteadofRs.10,80,725/-.TheCommissioner Appeals, however, upheld disallowing thecredit claimed towards loss. 4.That against the order in Appeals, the Revenue aswell as to Assessee preferred an Appeal before IncomeTax Appellate Authority, Agra. Both these appeals weredismissed on 22.3.2013. Whereagainst assessee haspreferred this Appeal on the following proposedsubstantial question of law: (i)That there is no provision in Chapter VI ofthe Act of 1961 that if the return to be filedunder Section 139 (1) is not filed by due datethen the loss shown for the current year inreturn of income shall not be allowed in thesame year. (ii)That the assessee can retract thestatement recorded at the time of searcheven at appellate stage that the incomedeclared by him did not belong to him but tocertain other entities. 4.That against the order in Appeals, the Revenue aswell as to Assessee preferred an Appeal before IncomeTax Appellate Authority, Agra. Both these appeals weredismissed on 22.3.2013. Whereagainst assessee haspreferred this Appeal on the following proposedsubstantial question of law: (i)That there is no provision in Chapter VI ofthe Act of 1961 that if the return to be filedunder Section 139 (1) is not filed by due datethen the loss shown for the current year inreturn of income shall not be allowed in thesame year. (ii)That the assessee can retract thestatement recorded at the time of searcheven at appellate stage that the incomedeclared by him did not belong to him but tocertain other entities. (iii)That the delay having been condonedupto 30.6.2011 further delay of four monthscould have been condoned. (iv)That the findings are perverse. Though few more questions are proposed; however they were not pressed. 5.Sub-Section (1) of Section 139 of Act of 1961envisages that every person - (a) being a company or afirm; or (b) being a person other than a company or afirm, if his total income or the total income of any otherperson in respect of which he is assessable under this Actduring the previous year exceeded the maximum amountwhich is not chargeable to income-tax, shall, on or beforethe due date, furnish a return of his income or the incomeof such other person during the previous year, in theprescribed form and verified in the prescribed mannerand setting forth such other particulars as may beprescribed. 6.Sub section (4) of Section 139 of Act of 1961stipulates that: “(4) Any person who has not furnished areturn within the time allowed to him undersub-section (1), or within the time allowedunder a notice issued under sub-section (1) ofsection 142, may furnish the return for anyprevious year at any time before the expiry of 6 one year from the end of the relevantassessment year or before the completion ofthe assessment, whichever is earlier: Provided that where the return relates to aprevious year relevant to the assessment yearcommencing on the 1st day of April, 1988, orany earlier assessment year, the reference toone year aforesaid shall be construed as areference to two years from the end of therelevant assessment year.” 7.In the case at hand, the Commissioner Appealfound: “2.2 ... A Survey operation u/s 133A has beencarried out at business premises of theappellant firm on 18.12.2008. Accordingly,appellant's case is required to be compulsorilyscrutinized for the assessment year underconsideration. The appellant is required to fileits return on or before 31.7.2009 as perprovisions of Sec.139(1) of the I.T.Act. Since nosuch return has been filed, AO has issuednotice under Section 142(1) on 22.09.2010requiring the appellant to file its return on orbefore 29.09.2010. Vide letter dated29.09.2010, the appellant has requested forfurther time on the ground of non-availability ofhis CA/AR on 29.09.2010. In the meantime, videletter dated 12.12.2008, the appellant hasrequested the AO to supply photocopy ofimpounded document since they relate to itsroutine business and it is facing difficulty toprovide service to its consumers in theirabsence. Nowhere this letter mentions that itsreturn cannot be filed in their absence. It is onlyvide letter dated 28.04.2011 that the appellant has informed the AO of its inability to file itsreturn in absence of photocopy of impoundeddocuments. In response, AO has informed theappellant, vide letter dated 10.06.2011 to takerequired photocopies on or before 15.06.2011either personally or through its AR and filereturn within 15 days therefrom. As perrecords, the appellant has taken/receiveddesired photocopies on 16.06.2011 as peracknowledgment made on letter dated22.12.2008. Thereafter vide notice dated24.06.2011 issued under Section 142(1), theappellant has been asked to produce copy ofreturn filed with enclosures alongwith reply toquestionnaire issued earlier on 19.04.2011. Thedate fixed for compliance is 15.07.2011. Inresponse, neither has anyone attended nor anyreply made. Required return has also not beenfiled till 09.11.2011 for the reasons best knownto the appellant. 2.3From above it is clear that AO himself hascondoned the delay in filing of return but onlytill 30.06.2011 as mentioned in his letter dated10.06.2011. No request for further condonationhas been made by the appellant nor granted bythe AO. Thus, AO is found justified in treatingthe return filed on 09.11.2011, much beyondprescribed as well as allowed time as belatedreturn and not giving credit for loss claimed bythe appellant. …” 8.These findings are based on cogent materialevidence. If the assessee had not sought condonation for 8 the period from 30.6.2011 to 9.11.2011, he has to blamehimself, which does not give rise to any substantialquestion of law, being pure question of fact. 9.As to retracting of the statement the CommissionerAppeal on the basis of evidence on record found: “3.2. Appellant'ssubmissionsalongwithassessment order thus have been considered.Assessment records, statement of thepartner(s) alongwith survey folder have alsobeen perused. During the course of surveyoperations on 18.12.2008, physical stockvaluation has been done at Rs.7,24,000/- atvarious sections of the business premises, asper inventory list. While preparing the same,one of the partner viz. Sh.Anurag Bhatnagar,present at the premises, categoricallymentioned and signed at various places asunder:- ^^mijksDr LVkWd dk ewY;kadu esjs }kjk crk;s x;s njksa dsvk/kkj ij fd;k x;k gS^^ 3.3Statement of firm's accountant Sh.KailashChand Jain, who has also been cross-examinedby the partner, categorically and vehementlymentions the fact of non-maintainance ofregular books of accounts by the assessee firm during the year (upto the date of survey) orany of the earlier years. In fact, as per recordseven the return filed by the appellant firm forearlier year (A.Y.2006-07) also do not containTrading, Profit and Loss account nor theappellant has produced them before the AOdespite there being statutory notices/summonsissued to it in this regard. As per his statementrecorded during the course of survey, thepartner has earlier mentioned that cash book,ledger, sale/purchase bills are maintained andbooks of accounts are kept with accountantShri Kailash Chand though no stock register ismaintained(Qn./Ans.No.6,7,14).Whenconfronted with accountant's statementregarding non-maintenance of books, thepartner has submitted as under :- iz-19 Jh dSyk'kpan tSu] equhe] dk c;ku fy;k x;k ftlesamUgksaus crk;k fd muds ikl vkidh dksbZ Hkh fdrkcsa] fcYl]okmplZ vkfn ugha gSaA tcfd vkius vius c;ku ds iz'u ua-6ds mRrj esa dgk gS fd QeZ ds O;olk; ls lEcfU/kr ys[kkiqLrdsa vdkmUVsUV Jh dSyk'kpan tSu ds ikl jgrh gSaAd`i;k crk;sa fd vkius ;g >wBk c;ku fdl dkj.k lsfn;k \m- eq>s ftruh tkudkjh Fkh] og eSaus crk nh FkhAiz-20 d`i;k crk;sa fd bl lEcU/k esa mUgksaus >wBk c;kufn;k gS ;k vki >wBk c;ku ns jgs gSa \ m- eSaus tks c;ku esa dgk Fkk og xyr FkkA esjs HkkbZ dksbl lEcU/k esa tkudkjh gksxhA iz-21 vki vius HkkbZ ls iwNdj crk,sa fd fdrkcsa rFkk[kjhnh&fcØh] okmplZ dgkW ,oa fdlds ikl gSa \ m- lp rks ;g gS fd gekjh QeZ ls lEcfU/kr dksbZ Hkhys[kk iqLrdsa ugha j[kh tkrh gSaA iz-19 Jh dSyk'kpan tSu] equhe] dk c;ku fy;k x;k ftlesamUgksaus crk;k fd muds ikl vkidh dksbZ Hkh fdrkcsa] fcYl]okmplZ vkfn ugha gSaA tcfd vkius vius c;ku ds iz'u ua-6ds mRrj esa dgk gS fd QeZ ds O;olk; ls lEcfU/kr ys[kkiqLrdsa vdkmUVsUV Jh dSyk'kpan tSu ds ikl jgrh gSaAd`i;k crk;sa fd vkius ;g >wBk c;ku fdl dkj.k lsfn;k \m- eq>s ftruh tkudkjh Fkh] og eSaus crk nh FkhAiz-20 d`i;k crk;sa fd bl lEcU/k esa mUgksaus >wBk c;kufn;k gS ;k vki >wBk c;ku ns jgs gSa \ m- eSaus tks c;ku esa dgk Fkk og xyr FkkA esjs HkkbZ dksbl lEcU/k esa tkudkjh gksxhA iz-21 vki vius HkkbZ ls iwNdj crk,sa fd fdrkcsa rFkk[kjhnh&fcØh] okmplZ dgkW ,oa fdlds ikl gSa \ m- lp rks ;g gS fd gekjh QeZ ls lEcfU/kr dksbZ Hkhys[kk iqLrdsa ugha j[kh tkrh gSaA iz- 22 fiNys ikWp o"kZ ds [kjhnh ,oa fcØh ds fcYl ,oaokmplZ dgkW ij gSa \ m- miyC/k ugha gSA iz- 23 d`i;k crk;sa fd fiNys ikWp o"kZ ds [kjhnh ,oa fcØhds fcYl ,oa okmplZ dgkW ij miyC/k ugha gSa \ m- [kjhnh ,oa fcØh ds fcYl gekjs ikl ugha gSA^^ Accordingly, voluntary disclosure/surrender of stock ofRs.7,24,000/- has been made by the partner as under :- iz- D;k vki dqN dguk pkgrs gSa \ m- ugha vHkh eSa dqN Hkh dgus dh fLFkfr esa ugha gwWA dyvius HkkbZ ls ppkZ djus ds mijkar crykÅ¡xkAmijksDr c;ku lksp&le>dj iw.kZ gks'kksgokl esa fcukfdlh ncko ds fn;kA c;ku dks i<+dj] lksp le>k ,oa blslR; ikdj vius gLrk{kj fd,A^^ 3.4Thereafter, the same partner viz.Sh.Anurag Bhatnagar has appeared before theAO on 19.12.08 alongwith his AR andsubmitted Power of Attorney in his favour.Thus, the appellant's contention that statementhas been given under coercion is not borne outfrom records. Retraction has been done after agap of about 4 months from date of survey videletter dated 17.04.2009 sent by dak. Theappellant has not given any documentaryevidence whatsoever at any stage of the proceedings either assessment or appeal-insupport of valuation of closing stock declaredby it in its return at Rs.12,19,780/- (as on31.03.2009) and at Rs.15,09,217/- (as on18.12.2008 i.e. date of survey). No bills/detailsof any kind been submitted in support of itssubmissions that during the course ofinventory valuation of date of survey, certainitems were left out. In fact, nowhere appellanthas challenged the physical valuation at hisspecified rates, not even in his retracted letterdated 17.04.2009 nor this plea taken. Theappellant is found to be in possession of stockas per physical inventory made, for which noexplanation with documentary evidence beengiven and the addition is found to have beenmade not merely on the basis of statementalone of one of the authorized partners of thefirm. 3.5On the basis of above and keeping in viewthe fact that no books of accounts found eitherfrom premises or from accountant norproduced till 14.12.2011 i.e. at the fag end ofthe period for completion of assessmentproceedings, addition of Rs.7,24,000/- ishereby, confirmed.” 10.When these findings are tested on the anvil of thefacts on record, the same are not found to be perverse aswould give rise to question of law to be entertained in anappeal under Section 260A of the 1961 Act. 11.Having thus considered, we do not find anysubstantial question of law which arises for considerationin present Appeal. 12.Consequently, Appeal fails and is dismissed. (SANJAY YADAV) JUDGE (S.K.AWASTHI) JUDGE