Ramesh Chander Gupta v. Income Tax Appellate Tribunal, Amritsarand Others

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH. --- Income-tax Appeal No. 102 of 2006Date of Decision: 8.11.2010 Ramesh Chander Gupta --- Appellant Versus Income Tax Appellate Tribunal, Amritsarand others --- Respondents CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL. --- PRESENT:Mr. Akshay Bhan, Advocatefor the appellant. Ms. Savita Saxsena, Govt. Standing Counselfor the respondents. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-tax Act,1961 (for short “the Act’”) has been filed by the assessee against theorder dated 23.9.2005, passed by the Income Tax Appellate Tribunal,Amritsar Bench, Amritsar, (SMC) (in short “the Tribunal”) in ITA No.61/ASR/1999 relating to the assessment year 1995-96. The point for determination in this appeal is, whether theexcess stock of Ist and 2[nd] class bricks could be adjusted againstshortage in stock of 3[rd] class tiles? Briefly stated the facts of the case as narrated in theappeal are that the assessee, who is a brick-kiln owner, filed returnfor the assessment year 1995-96 declaring his income at Rs.33,980/- The Income Tax Officer, respondent No.3, on 5.8.1994conducted a survey under Section 133-A of the Act and detected the difference as indicated herein below: Though the assessee furnished written reply anddisputed the correctness of the notice issued to him wherein hespecifically mentioned that the difference of bricks noticed duringsurvey was the result of counting of the bricks in the stacks and, inany case, the difference was merely 2.5% which should be treated asnegligible and no addition on the basis thereof be made. But theassessing officer vide order dated 24.11.1997, Annexure P-1,besides initiating proceedings under Section 271(1)(c) separately,completed assessment at the total income of Rs. 1,40,770/-. Appealpreferred by the assessee against the order, Annexure P-1, wasdismissed by the Commissioner of Income Tax (Appeals), Bathinda[hereinafter referred to as “CIT(A)”] vide order dated 1.7.1998,Annexure P-2. The appellant-assessee moved an application underSection 154 of the Act for rectification of order, Annexure P-2, but thesame was dismissed vide order dated 2.12.1998, Annexure P-3. The assessee preferred appeal before the Tribunalchallenging the order of CIT(A), Annexure P-3. The Tribunal partlyallowed the appeal vide order dated 27.2.2004, Annexure P-4. The appellant thereafter filed Income-tax Appeal No. 300of 2004 in this Court challenging the order, Annexure P-4. The saidappeal was, however, dismissed as withdrawn with liberty to theappellant to move an application before the Tribunal for rectificationof the order, Annexure P-4. The appellant then filed applicationunder Section 254(2) of the Act wherein a plea was taken that therewas no quality of 3[rd] class Tiles in the business of brick-manufacturing, and the tiles shown as of 3[rd] class quality wereactually bricks of either 1[st] or 2[nd] Class quality and, thus, there shouldhave been a set off of 63400, 3[rd] class tiles with excess stock of28750 of 1[st] and 45280 of 2[nd] class tiles. The plea raised by theassessee in the application did not find favour with the Tribunal andwas consequently dismissed vide order dated 23.9.2005, AnnexureP-7, and it is this order of the Tribunal which is under appeal beforethis Court. We have heard learned counsel for the parties andperused the record. The assessing officer had made addition of Rs. 87,863/-on account of shortage of bricks and excess tiles found during surveycarried out on 5.8.1994. The CIT(A) had affirmed the aforesaidaddition. However, on further appeal to the Tribunal, the addition onaccount of excess stock of Ist and 2[nd] class bricks was sustained butthe relief was allowed to the assessee in respect of shortage in 3[rd] class tiles as profit rate was to be applied to the same. The relevant We have heard learned counsel for the parties andperused the record. The assessing officer had made addition of Rs. 87,863/-on account of shortage of bricks and excess tiles found during surveycarried out on 5.8.1994. The CIT(A) had affirmed the aforesaidaddition. However, on further appeal to the Tribunal, the addition onaccount of excess stock of Ist and 2[nd] class bricks was sustained butthe relief was allowed to the assessee in respect of shortage in 3[rd] class tiles as profit rate was to be applied to the same. The relevant observations of the Tribunal read thus: “6. After hearing both the sides and considering thematerial on record, I find that on survey, the assessee isfound to have excess stock of first class bricks at 28,750,bricks of 2[nd] class at 45,280 and the short stock of thirdclass tiles to the extent of 63,400 and by applying rate ofRs. 725/-, Rs. 500/- and Rs. 700/- per 100 bricks,respectively, and addition was worked out to the extent ofRs. 87,863/- on all these items. Since stock with respectto first class and second class bricks have been found inexcess and inventory prepared at the time of survey hadduly been signed by the assessee, therefore, the additionin this regard is called for and the same has rightly beenmade by the A.O. at Rs. 43,483/- by adopting the salerate of Rs. 725/- and Rs. 500/- per one thousand brickswith respect to first and second class bricks respectively.Since the average rate comes to Rs. 612.50, therefore,the plea of the assessee to adopt Rs. 699/- is untenableand is rejected. As such, the CIT(A)’s order in rejectingthe rectification application with regard to these two itemsis justified and calls for no interference. 7. So far as the short stock of 63,400 of third class tiles isconcerned, the plea of the assessee is correct that G.P.rate can only be applied in the case of excess stock andnot the entire amount could be added, therefore, thelearned CIT(A) should have accepted the contention of the assessee to restrict such addition by applying theG.P. rate as declared / determined in this case. Hence,the order to this extent could validly be rectified. As suchwhile considering the entirety of the facts and thecircumstances, I allow the appeal of the assessee in thisrespect and adopt profit rate with respect to short stock ofthird class tiles found at the time of survey by restrictingthe addition to the extent of G.P. of 16.14% and restrictthe addition to Rs. 7,163/- instead of Rs. 44,380/- made by the A.O. and confirmed by the CIT(A).” The miscellaneous application filed under Section 254(2)of the Act was dismissed by the Tribunal as there was no mistakeapparent on the record which required rectification. The findings recorded by the Tribunal are pure finding of fact. However, an effort was made by the learned counsel for theappellant to persuade this Court to re-appreciate the evidence onrecord and render a different finding on the basis thereof. Thefindings recorded by the Tribunal are based on possible view takenon appreciation of evidence which calls for no interference by thisCourt in exercise of jurisdiction under Section 260-A of the Act. In view of the above, the appeal is accordingly dismissed. (AJAY KUMAR MITTAL)JUDGEJUDGE November 8, 2010*rkmalik* (ADARSH KUMAR GOEL) JUDGE