M/S. Samaddar Brothers v. Commissioner Of Income Tax,Burdwan & Anr

O-81 ITA/295/2009 IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE M/S. SAMADDAR BROTHERS -Versus- COMMISSIONER OF INCOME TAX,BURDWAN & ANR. BEFORE :THE HON’BLE JUSTICE T.S. SIVAGNANAMAndTHE HON’BLE JUSTICE HIRANMAY BHATTACHARYYADate : 13[th ]February, 2023 Appearance :Mr. Ramendra Nath Biswas, Adv.Mr. Avra mazumdar, Adv.Mr. Suman Bhowmick, Adv.Mr. Samrat Das, Adv.…for the appellant.Mr. Soumen Bhattacharyya, Adv.…for the respondent. The Court : This appeal filed by the assessee underSection 260A of the Income Tax Act, 1961 (the ‘Act’ forbrevity) is directed against the order dated 30[th] June, 2009passed by the Income Tax Appellate Tribunal, “C” Bench, Kolkata(the Tribunal) in ITA No.151/Kol/2008 for the assessment year1995-96.The appeal was admitted on 23[rd] March, 2010 on thefollowing substantial questions of law: (i)Whether on the facts and in the circumstancesof the case the addition of Rs.3,10,374/-of the case the addition of Rs.3,10,374/- under the heading “Trading Account” being the estimated profit at the rate of 8.4% on the excess stock amounted to ₹36.09 lakhs is vitiated in law ? (ii)Whether on the facts and in the circumstancesof the case the addition of Rs.49,640/- underbeing the estimated profit at the rate of8.65% on the alleged unaccounted purchaseprice of goods at Rs.5,72,732/- amounts todouble taxation on the same goods ?of the case the addition of Rs.49,640/- underbeing the estimated profit at the rate of8.65% on the alleged unaccounted purchaseprice of goods at Rs.5,72,732/- amounts todouble taxation on the same goods ? (iii)Whether on the facts and in the circumstancesof the case the addition of Rs.10,25,022/- asconfirmed by the Tribunal is vitiated in law ?of the case the addition of Rs.10,25,022/- asconfirmed by the Tribunal is vitiated in law ? We have heard Mr. Ramendra Nath Biswas, learnedcounsel assisted by Mr. Avra Mazumdar, Mr. Suman Bhowmick andMr. Samrat Das, learned Advocates for the appellant and Mr.Soumen Bhattacharyya, learned standing counsel for therespondent/revenue. The present proceedings arise out of a second round oflitigation. In the first round, the learned Tribunal hasrecalled its order and the matter was remanded to the AssessingOfficer for a fresh assessment. Three issues arise forconsideration.We have very carefully perused the orders passed bythe Assessing Officer, the CIT(A) as well as the Tribunal in the earlier round as well as in the present round of litigationand noted the submissions of the learned Advocate for theappellant and that of the learned standing counsel for therespondent/revenue.With regard to the first issue, the learned Tribunalhas examined the factual position and noted that there was asurvey at the business premises of the assessee on 9[th]September, 1994 under Section 133A of the Act. During thecourse of such survey, stock of inventories was taken in thepresence of the assessee-firm and it was found to be of thevalue of Rs.66,11,036/-. The contention of the assessee wasthat the goods found in the said shop do not exclusively belongto the assessee but also in respect of other firms which weresituated in the other floors of the same building. The surveyteam found that there was no separate sale counter found in theother floors of the building and the assessee could not showany separate trade licence, sale memo, purchase memo, books ofaccount etc. in the individual name of the three other persons.During the course of assessment, the assessee filed a list oftotal stock as on the date of survey i.e., 9[th] September, 1994,according to which, the assessee-firm had a stock ofRs.12,58,555.01 whereas the other three firms had stock ofdifferent values. Thus, the explanation sought to be offeredby the assessee was that the total stock was not exclusively of the assessee-firm. The Assessing Officer did not accept thestand of the assessee as the assessee could not explain theexcess physical stock found during the course of survey and hetook the profit of 8.65% on the alleged difference of stock andadded the same to the profit of the assessee-firm which workedout to Rs.4,16,246/-. On appeal, the CIT(A) deleted theaddition. Aggrieved by the same, the revenue preferred appealbefore the Tribunal and the Tribunal directed the AssessingOfficer to compute the profit at 8.6% on Rs.36.09 lakh insteadof Rs.48.12 lakh which came to Rs.3,10,374/- instead ofRs.4,16,246/-. This direction was issued by the Tribunal byorder dated 18[th] December, 2003. Subsequently, the order ofTribunal was recalled and the matter was restored to theAssessing Officer for fresh adjudication. The AssessingOfficer again estimated the gross profit at Rs.4,16,246/-. TheCIT(A) granted partial relief and deleted the addition ofRs.1,05,872/- and restricted the disallowance to Rs.3,10,374/-.Aggrieved by such order, the assessee preferred appeal beforethe learned Tribunal. The learned Tribunal took note of thefacts recorded by the authorities and found that there was nodispute that the assessee was dealing in clothes and hosierywherein stock has been inventorised by the survey team in thepresence of the partners of the assessee and the same wasvalued at Rs.66,11,036/- which was in excess of what was entered in the books of accounts. Thus, in the absence of anyexplanation given by the assessee either before the AssessingOfficer or before the CIT(A) or before the Tribunal, theTribunal rejected the plea. Thus, we find that the learnedTribunal rightly took note of the facts and refused tointerfere with the order passed by the CIT(A) which had grantedpartial relief to the assessee and in the absence of any erroror perversity in the order passed by the Tribunal, we are notinclined to interfere with the same. Accordingly, thesubstantial question of law no.1 is answered against theassessee.With regard to the substantial question of law no.2,the Assessing Officer at the time of assessment proceedingsfound that as per the “Mahajani Khata” marked as ‘SKM-8’ foundduring the course of survey, the assessee-firm had purchasedgoods worth Rs.5,72,732/- from different parties during theperiod 1[st] April, 1994 to 31[st] March, 1995. The assessee failedto produce any supporting material regarding the purchaseswhich were found recorded in the said Khata but not found inrecorded in the books of account of the assessee produced atthe time of the assessment proceedings. It was further foundfrom the said Khata that payments were made to the parties ondifferent dates mostly after the purchases. Thus, theAssessing Officer concluded that the assessee sold goods worth Rs.5,72,732/- which were not recorded in the books of accountand earned profit out of books. Therefore, the AssessingOfficer estimated profit at the rate of 8.65% on this amountwhich worked out to Rs.49,640/-. This order was affirmed bythe CIT(A). The assessee challenged the order before theTribunal contending that no separate addition on the basis ofthe Khata is to be made after addition has been made byestimating the profit on excess stock on the basis of Khataitself and it would amount to double taxation. The learnedTribunal, on going through the entire facts, held that theassessee did not produce any material to substantiate theirsubmission and rebut the findings recorded by the AssessingOfficer which was affirmed by the CIT(A). Therefore, inabsence of any evidence produced by the assessee, the additionwas sustained. We find that there is no error in the approachof the Tribunal which had taken note of the facts, moreparticularly, that the assessee failed to discharge the burdencast upon him but producing evidence. For such reason, thesubstantial question of law no.2 is answered against theassessee.So far as substantial question of law no.3 isconcerned, this also pertains to sums of money paid to thedifferent parties by the assessee-firm during theaforementioned period and the payments were not found recorded in the books of account of the assessee firm. Therefore, theAssessing Officer treated the same as undisclosed income andadded it to the total income. This order was affirmed by theCIT(A). The assessee challenged the said order before theTribunal. The Tribunal accepted the submission of the revenuethat there was no explanation furnished by the assessee for notrecording the payments in the books of account and, therefore,the Tribunal did not find any infirmity in the order passed bythe Assessing Officer on addition of Rs.10,25,022/-.Furthermore, the Tribunal noted that the assessee could notproduce any evidence or material before the lower authoritiesor before the Tribunal and merely stated that the transactionswere not related to the business of the assessee-firm.Furthermore, the Tribunal noted that despite opportunitygranted by the Tribunal on the earlier occasion when the matterwas remanded to the Assessing Officer for fresh decision, theassessee did not avail the opportunity. This could beconfirmed by perusal of the assessment order from which it isseen that in spite of repeated notices issued to the assessee,the assessee did not turn up nor respond to those notices thusshowing that the did not cooperate in the assessmentproceedings. Thus, we find no error in the order passed by thelearned Tribunal confirming the said addition of Rs.10,25,022/-. For all the above reasons, the appeal filed by theassessee (ITA/295/2009) is dismissed and the substantialquestions of law are answered against the assessee. (T.S. SIVAGNANAM, J.) (HIRANMAY BHATTACHARYYA, J.) A/s./S.Kumar