M/S V.m.spinning Mills v. Hemant Gupta, J

ITA No.117 of 2011 (O&M) Date of Decision: 22.09.2011 M/s V.M.Spinning Mills …Appellant Versus Commissioner of Income Tax (Appeals)-II, Ludhiana…Respondent CORAM: HON’BLE MR. JUSTICE HEMANT GUPTAHON’BLE MR. JUSTICE JASWANT SINGH Present:Mr. Pankaj Gupta, Advocate, for the appellant. HEMANT GUPTA, J. The assessee is in appeal under Section 260A of the IncomeTax Act, 1961 (for short ‘the Act’) arising out of an order passed by theIncome Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short‘the Tribunal’) dated 29.04.2009. The assessee has claimed the following substantial questions of law: (i)Whether on the facts and in law, the learned ITAT is legallyjustified to hold that the addition on account of profits onextrapolated sales be restricted to the unaccounted 17 salesbills amounting to Rs.1,11,99,427/- by applying GP rate of10.35%?justified to hold that the addition on account of profits onextrapolated sales be restricted to the unaccounted 17 salesbills amounting to Rs.1,11,99,427/- by applying GP rate of10.35%? (ii)Whether on the facts and in law, the learned ITAT is legallyjustified in directing the addition of Rs.20 lacs on account ofunexplained investment made towards working capital?justified in directing the addition of Rs.20 lacs on account ofunexplained investment made towards working capital? The Assessing Officer in its order dated 28.12.2007 (AnnexureA-1) has found that the assessee has concealed the particulars of its incomeof Rs.21,00,000/- on account of investment made from the undisclosedsources; Rs.31,94,481/- on account of extrapolated sale for 340 days on thebasis of sale out of books of Rs.1,11,99,427/- in 127 days by applying grossprofit rate of 10.35% and; Rs.71,07,100/- as addition on account of workingcapital required for attaining sale of Rs.1,11,99,427/-. Such order of the Assessing Officer was modified in appeal.The learned Commissioner of Income Tax confirmed the addition onaccount of extrapolated sale on the basis of sale outside the books ofaccounts for the period 11.10.2004 to 25.02.2005. The Commissioner alsoconfirmed the addition of Rs.71,07,100/- for working capital requirementsof the assessee, whereas the addition of Rs.21,00,000/- in the capitalaccount of assessee was set aside. The learned Tribunal in further appeal by the Revenue as wellas by the Assessee rejected the contention of the assessee in respect ofaddition of sales through 17 sale bills amounting to Rs.1,11,99,427/- andaffirmed the finding that such sales were made outside the books ofaccounts. However, it held that there is no justification to infer that theassessee would have undertaken sales outside the books of account duringthe rest of the financial year also, therefore, the assessment of unrecordedsales were limited to Rs.1,11,99,427/- representing 17 unrecorded sale billsalone. The Tribunal partly granted relief, when it made addition of Rs.20lacs on account of unexplained investment made towards the workingcapital as against Rs.71,07,100/- added by the Assessing Officer and upheldby the Commissioner of Income Tax. The Revenue preferred an appeal bearing ITA No.670 of 2009before this Court in respect of issues decided by the Income Tax AppellateTribunal against the Revenue. Such appeal was dismissed by this Court bypassing a detailed order on 20.07.2010. It is, thereafter, the assessee filedthe present appeal on 25.09.2010 along with an application for condonationof delay. Though we do not find any sufficient ground for condonation ofdelay, but also on merit, in our opinion, no substantial question of law arisesfor consideration by this Court. The Revenue preferred an appeal bearing ITA No.670 of 2009before this Court in respect of issues decided by the Income Tax AppellateTribunal against the Revenue. Such appeal was dismissed by this Court bypassing a detailed order on 20.07.2010. It is, thereafter, the assessee filedthe present appeal on 25.09.2010 along with an application for condonationof delay. Though we do not find any sufficient ground for condonation ofdelay, but also on merit, in our opinion, no substantial question of law arisesfor consideration by this Court. In respect of question No.1, the learned Tribunal has recordedfinding of fact that the assessee had made sale of goods vide unaccounted17 sale bills amounting to Rs.1,11,99,427/-. The Commissioner of IncomeTax has rightly rejected the contention raised before it that such bills wereraised to avail the financial benefits from the Bank. The Commissionerfound that no such stand was taken before the assessing officer. In fact, Mr.Vipan Kumar Mahajan did not explain this fact during the assessmentproceedings rather left the office without signing the order-sheet entries.Such question of fact does not raise any substantial question of law forconsideration of this Court. The Assessing Officer has made addition of Rs. 71,07,100/- onaccount of working capital required for attaining sale of Rs.1,11,99,427/- bytaking into consideration the secured loan, unsecured loans and capital ofthe partners. The Commissioner of Income Tax upheld the said finding, asthe said amount is of unaccounted sale. The learned Tribunal modified thefindings of the Assessing Officer and that of the Commissioner of IncomeTax and restricted the addition to the extent of unrecorded sales to the tuneof Rs.1,11,99,427/-. In view of the said modification of the findings, itfound that level of sales made outside the books of accounts have been reduced, therefore, it would be proper that an addition of Rs.20 lacs onaccount of unexplained investment made towards the working capital,would meet the ends of justice. The Tribunal has reduced the addition ofRs.71,07,100/- to Rs.20,00,000/- keeping in view the sales made outside thebooks of accounts. The extension of such benefit does not raise anysubstantial question of law as such benefit has been extended in the facts ofthe case. Still further, the Revenue’s appeal against such addition standsdismissed and the assessee has chosen to file the present appeal after thedecision in appeal of revenue. It is not a bona-fide appeal as well. Consequently, we do not find any merit in the present appeal.The same is dismissed. (HEMANT GUPTA)JUDGE 22.09.2011Vimal (JASWANT SINGH)JUDGE