The Commissioner Of Income Tax-16 v. M/S.vaishali Jewellers

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 5752 OF 2010 The Commissioner of Income Tax-16versus M/s.Vaishali Jewellers ..Appellant ..Respondent -------- Mr. A.R.Malhotra for the Appellant. Mr.P.J. Pardiwala, Sr. Counsel with Mr. Atul K. Jasani for the Respondent. ............. CORAM : J.P. DEVADHAR &M.S.SANKLECHA, JJ. DATE: 27[th] November, 2012 P.C.: 1This appeal by the Revenue under Section 260A of the Income Tax Act, 1961 (the Act) challenges the order dated 06.10.2006 of the Income Tax Appellate Tribunal (the Tribunal) relating to the block period 01.04.1992 to 14.10.1997. 2 The Revenue has formulated the following reframed questions of law for the consideration of this Court. a)“Whether on the facts and circumstances of the case and in law, the Tribunal was right in deleting the additions of Rs. 53,98,229/- and Rs.2,26,507/- made in the block assessment order for the periods relevant to A.Y. 1996-97 and 1998-98 (i.e. 01.04.1997 to 14.10.1997) forming part of the block period 01.04.1992 ti 14.10.1997?” 3Mr. Malhotra, Counsel appearing for the appellant very fairly states that he is not challenging the deletion of Rs.2,26,507/- made by the Tribunal in respect of the block assessment order relevant to the Assessment Year 1998-99. Therefore, the only issue which is being pressed by the revenue is with regard to the deletion of Rs.53,98,229/- made in the block assessment order relevant to the Assessment Year 1996-97. 4The appellant is a partnership firm engaged in the Jewellery business. On 14.10.1997, a search operation was carried out by the Revenue at the business premises of the respondent as well as at the residence of the partners. During the course of search at the partner's residence, the Revenue seized a Balance Sheet dated 31.03.1996. In the seized Balance Sheet the value of closing stock was shown at Rs.75,40,420/-. The Assessing Officer found that the respondent in its balance sheet filed alongwith its return of income for the Assessment Year 1996-97 had declared a closing stock of Rs.21,42,191/-. In the circumstances, the difference between Rs.75,40,420/- and Rs.21,42,191/- was added as unaccounted closing stock for the Assessment Year 1996-97 in the block assessment order dated 28.12.1999. This was after bringing to tax the profit shown in the seized Balance Sheet at Rs. 28,59,171/- over and above Rs. 12,91,911/- disclosed in the regular return of income for the assessment year 1996-97. 5In first appeal, the Commissioner of Income Tax (Appeals) found that the Balance Sheet seized from the residence of the respondent's partner disclosed profit of Rs. 28,59,171/- for the period ending 31.03.1996. The aforesaid sum of Rs. 28,59,171/- was brought to tax and the same was over and above Rs.12,91,911/- made in the regular Income Tax return filed for the assessment year 1996-97. Consequently, for the assessment year 1996-97, the respondent had offered to tax an amount of Rs.41,51,082/-. In view of the above, the Commissioner of Income Tax (Appeals) by his order dated 01.01.2001 allowed the respondent's appeal holding that once the profit disclosed in the seized balance sheet has been taken into account, there is no occasion for making an addition of closing stock as shown in that very Balance Sheet over and above the profits which has already been offered to tax. Further, it was also held that the addition of Rs. 53,98,229/- was not supported by any other evidence or material found during the search or gathered during the block assessment proceeding. Therefore, the addition of Rs.53,98,229/- was deleted by the order dated 01.01.2001 of the Commissioner of Income Tax (Appeals). respondent had offered to tax an amount of Rs.41,51,082/-. In view of the above, the Commissioner of Income Tax (Appeals) by his order dated 01.01.2001 allowed the respondent's appeal holding that once the profit disclosed in the seized balance sheet has been taken into account, there is no occasion for making an addition of closing stock as shown in that very Balance Sheet over and above the profits which has already been offered to tax. Further, it was also held that the addition of Rs. 53,98,229/- was not supported by any other evidence or material found during the search or gathered during the block assessment proceeding. Therefore, the addition of Rs.53,98,229/- was deleted by the order dated 01.01.2001 of the Commissioner of Income Tax (Appeals). 6In second appeal, the Tribunal by its order dated 06.10.2006 upheld the finding of the Commissioner of Income Tax (Appeals) with regard to that deletion of Rs. 53,98,229/- being sought to be added as undisclosed stock. 7Mr. Malhotra, Counsel for the Revenue in support of the appeals submits that the Tribunal ought to have reversed the order of the Commissioner of Income Tax (Appeal) and added the amount of Rs.53,98,229/- being unaccounted stock found in the balance sheet dated 31.03.1996 seized from the residence of the partner of the respondent. He further submits that during the assessment proceeding leading to the block assessment order dated 28.12.1999, the respondent had failed to explain the unaccounted stock of Rs.53,98,229/- found in the seized balance sheet for the Assessment Year 1996-97. Consequently, the same has to be added to the Income of the respondent and brought to tax in Block assessment for the period 01.04.1992 to 14.10.1997. 8As against the above, Mr. Percy Pardiwala, Senior Counsel for the Respondent contends that no substantial question of law arises in this appeal. According to Mr. Pardiwala, as there are concurrent finding of fact by the Commissioner of Income Tax (Appeals) and the Tribunal holding that the profit as disclosed in the seized balance sheet to the extent of Rs.28,59,171/- had already been disclosed and offered to tax. In view of the above, the addition of Rs. 53,98,229/- was not warranted. Further, it was held that the addition of Rs. 53,98,229/- by the Assessing Officer was not supported by any other evidence or material found during the course of search supporting the stand of the revenue that there was undisclosed stock in possession of the respondent. In the circumstances, Mr. Pardiwala submits that the appeal be not entertained. 9We have considered the submission. We find that the respondent has offered in the aggregate an amount of Rs.41,51,082/- as taxable income for the Assessment Year 1996-97. The aforesaid amount includes an amount of Rs.28,59,171/- being the undisclosed income disclosed in the seized Balance Sheet from the residence of the respondent's partner. Once, the revenue has accepted the amount of profit shown in the seized Balance Sheet then there was no justification to make any further addition from that very seized Balance Sheet as sought to be done by the Assessing Officer. Further, it is very pertinent to note that neither during the course of the search, nor during the block assessment proceeding the Revenue found any evidence or material to support that the respondent was in possession of undisclosed stock valued at Rs.53,98,229/-. Further, the finding of the authorities below is essentially a questions of fact. Therefore, the reframed question does not give rise to any substantial question of law. 10In view of the above, appeal is dismissed with no order as to costs. (M.S.SANKLECHA, J.) (J.P.DEVADHAR, J.)