Shantilal Manakchand Lalwani v. Asstt. Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 62 OF 2007 Shantilal Manakchand Lalwani. VersusAsstt. Commissioner of Income Tax. .............Appellant. .........Respondent. Mr. N. R. Bubna for the Appellant.None for the Respondent. P.C.: CORAM :BILAL NAZKIandA. A. KUMBHAKONI, JJ.DATED :22ND JULY, 2008. Although 8 questions have been framed in the memo of appeal, afterarguing for a while, it was conceded by the learned Counsel for the appellantthat none of these questions is a question of law but wanted this court toallow him to amend the memo to frame additional question, “As to whetherthe order passed by the Income Tax Appellate Tribunal was perverse”.Therefore, we have heard the learned Counsel for the appellant on thatquestion as well. 2. 2.Basically, the matter which was considered by the Assessing Officer,the appellate authority and the Tribunal was a factual question. The assesseewas running a proprietory business in electrical items. Search and seizure was conducted on 6[th] January, 1990. In the course of search proceedings,statement of the appellant was recorded under the provisions of Section 132(4) of the Income Tax Act. An additional income of Rs.15 lakhs wassurrendered by the appellant for taxation. The broad details were alsofurnished. 3.The dispute is with regard to the addition of Rs.2,31,871/- which wasan addition on account of suppression of sale. During physical verification ofinventory of the stock at the time of search, it was valued at Rs.8,07,633/-.On that date the stock as per book of accounts was Rs.10,39,504/-. This wasexplained in his statement by the appellant himself and relying on thisstatement the assessment was made. 4.This assessment was, however, set aside by the appellate authority forextraneous reasons. The Tribunal restored the findings and on the basis ofthe evidence which was before the Assessing Officer and came to theconclusion which in no way can be termed to be perverse. The Tribunal while considering the rival contentions held as under: "6.1 Coming to the revenue's appeal No. 390/PN/97, the issue to bedecided is whether the Ld. CIT(A) was right in deleting the amountof Rs.2,31,871/- made by the A.O. On account of suppressed sales.The facts of the case on this issue have been set out in thedecided is whether the Ld. CIT(A) was right in deleting the amountof Rs.2,31,871/- made by the A.O. On account of suppressed sales.The facts of the case on this issue have been set out in the assessment order as well as the order of CIT (A). The assessee'scase is that the impugned addition was made on insufficient factsand in any case, no addition could be made of an amountexceeding the gross profit on the shortage of stock found. The caseof the A.O. is that in the absence of quantitative details, it cannotbe said whether corresponding purchases were accounted or not inthe books of account. It is also found in the course of assessmentproceedings that in respect of 23 items, the value put in theinventory was lower than the actual cost price. We have consideredthe facts of the case and the arguments of both the parties. It maybe stated that the aforesaid amount was part and parcel of over allamount of Rs.15 lakh confessed by the assessee under theprovisions of Sec. 132(4). On considering the facts, we find that theDepartments case is better placed than the case of B. D. Dal (supra)because in that case confession was made in the course survey.That was also a case where shortage of stock was found. In spite ofthis, it was held in that the assessee could not be allowed to retractfrom the statement unless it was proved by him that the statementwas given under coercion, threat, etc. In that case, goods were noteven weighed and shortages were estimated. In the instant case, all the goods have been inventorised and shortages have been found. the goods have been inventorised and shortages have been found. We have also seen that decision of Hon' ble Pune Bench in the caseof Hotel Kiran that the statement u/s 132(4) stands on a differentfooting than a statement given under other provisions of I.T. Act orunder other Acts as legislature has enacted that this statement canbe used in the course of assessment. Thus, while the facts areidentical to the case of B.D. Dal (supra), the ratio of cases of B. D.Dal and Hotel Kiran are applicable. The facts do not correspondwith the facts of the case of Nageenbhai Dayabai Patel of JagusteTandale (supra). Keeping in view the devisions in the cases of HotelKiran and B. D. Dal, we are of the view that the Ld. CIT(A) was notright in directing the A.O. To delete the addition of Rs.2,31,871/-and add only gross profit of Rs.10,752/- in its place. Accordingly,the addition of Rs.2,31,871/- made by the A. O. is sustained.” 5.For the aforesaid reasons, we do not find any merit in the appeal,which is, accordingly, dismissed. (BILAL NAZKI, J.) Sd/- (A. A. KUMBHAKONI, J.)