Madras High Court
The Commissioner Of Income Tax vs Smt.Sakuntala Devi Khetan on 4 March, 2013
Bench: R.Banumathi, K.Ravichandrabaabu
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 04-03-2013 CORAM: THE HONOURABLE MRS.JUSTICE R.BANUMATHI AND THE HONOURABLE MR.JUSTICE K.RAVICHANDRABAABU Tax Case (Appeal) Nos.59 to 63 of 2010 The Commissioner of Income Tax , Central I, Chennai. .. Appellant in all the appeals Versus Smt.Sakuntala Devi Khetan .. Respondent in all the appeals Prayer: Appeals filed against the order of the Income Tax Appellate Tribunal "D" Bench, dated 7.11.2008, in I.T.A Nos.2057/Mds/2006, 2750 to 2753 /Mds/2005 under Section 260A of the Income Tax Act, 1961 for the assessment years 1998-99 to 2002-2003 For Appellant : Mr.M.Swaminathan For Respondent : Mr.J.Balachander for M/s. S.Sridhar JUDGMENT
(Judgment of the Court was made by K.RAVICHANDRABAABU J.) The Revenue is on appeal in respect of the assessment years 1998-1999 to 2002-2003. The following is the common substantial question of law raised in all these appeals :-
"Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the turnover and profit of the assessee for the assessment year under consideration could not be computed in the reassessment on the basis of information received in the course of search conducted in certain cases on the sole ground the sales tax authorities have accepted the assessee's purchases, sales and closing stock ?"
2. The assessee is doing business in turmeric trade under the name and style of Jagadambal Traders. The assessee filed the returns individually in respect of all those assessment years. However, the Assessing Officer believed that the income chargeable to tax had escaped assessment on the reason that the assessee had discounted drafts/cheques received from various parties including M/s.M.Periasamy Gounder & Co. This information was received by the Assessing Officer from the Deputy Director of Income Tax (Investigation), Erode based on the materials seized during the course of action under Section 132 of the Income Tax Act in the premises of M/s.M.Periasamy Gounder & Co. and one E.P.Thiyagarajan, the proprietor of the said firm. Therefore, the Assessing Officer found that there was excess turnover in all those assessment years. The assessee explained before the Assessing Officer that she was not maintaining any records and addition could not be made simply based on the statement obtained from third parties. It was also contended by the assessee that the sales tax Authorities have verified the assessee's purchases, sales, closing stock etc., in respect of each assessment year and accepted the return filed before them. However, the Assessing Officer did not accept the said contention of the assessee and consequently assessed the turnover as Rs.3,19,56,498/-, Rs.63,03,794/-, Rs.49,87,071/- Rs.1,84,75,086 and Rs. 4,06,88,037/- respectively for the assessment years 1998-1999 to 2002-2003 and accordingly applied G.P. rate accepted by the assessee. On appeal by the assessee as against these assessment orders, the Commissioner of Income Tax (Appeals) confirmed the order of the Asessing Officer. Further appeal was preferred before the Tribunal by the assessee. The Tribunal following the decision of this Court reported in (2005) 273 ITR 262 (Commissioner of Income Tax Vs. Anandha Metal Corporation), partly allowed the appeal and directed the Assessing Officer to adopt the figures of turnover finally assessed by the sales-tax Authorities and apply the G.P. rate accordingly. Aggrieved against the same, the present appeals are preferred by the Revenue with the common question of law as stated supra.
3. Learned counsel appearing for the Revenue submitted that the Assessing Officer was right in making the addition based on the information obtained from the said E.P.Thyagarajan, who is the proprietor of M/s.M.Periasamy Gounder & Co which shows that the assessee had discounted drafts/ cheques received from various parties including the said company. It is also contended that though the assessee was given sufficient opportunity to explain the discrepancies, she had not disproved the same and therefore the addition made by the Assessing Officer is correct.
4. Per contra, the learned counsel for the assessee submitted that the issue involved in these appeals is covered by the decision of this Court reported in (2005) 273 ITR 262 (Commissioner of Income Tax Vs. Anandha Metal Corporation) and therefore the Assessing Officer cannot go beyond the figures available under the sales tax return filed by the assessee.
5. We heard both sides and also perused the decision of this Court relied on by the assessee and reported in (2005) 273 ITR 262 (Commissioner of Income Tax Vs. Anandha Metal Corporation).
6. The short point that arises for consideration in these appeals is as to whether the additions can be made solely based on the information received in the course of search conducted in certain cases by totally ignoring the sales tax return filed by the assessee and accepted by the sales tax Authorities, which, if taken, would disprove the claim of the Revenue.
7. This Court in the above said decision had found that unless and until the competent authority under the Sales Tax Act differs or varies with the closing stock of the assessee, the return accepted by the Commercial Tax Department under the TNGST Act is binding on the Income Tax Authorities and the Assessing Officer, therefore, has no power to scrutinise the return submitted by the assessee to the Commercial Tax Department and accepted by the said authorities. Further, it is observed therein that the Assessing Officer has no jurisdiction to go beyond the value of the closing stock declared by the assessee and accepted by the Commercial Tax Department. In this case, admittedly, the assessee had placed the sales tax return before the Assessing Officer in respect of the assessment years 1998-99 to 2001-02. Therefore, sufficient materials are placed before the Assessing Officer in respect of those assessment years viz., the sales tax returns filed by the assessee and accepted by the authorities.
8. The Tribunal, therefore, rightly found that the Department could not have made the addition merely on the basis of the statement of third parties. Consequently, the Tribunal set aside the order of the first appellate authority and directed the Assessing Officer to adopt the figures of turnover finally asessed by the sales tax Authorities and apply the G.P. rate accordingly. We find that the order passed by the Tribunal following the order passed by this Court in Anandha Metal Corporation case is perfectly in order and does not warrant any interference.
9. However, insofar as the assessment year 2002-03 is concerned, no materials seemed to have been placed by the assessee viz., the sales tax returns for the said year before the authorities below . Even the Tribunal in its order has not referred to the sales tax return filed by the assessee and the order passed therein in respect of the assessment year 2002-2003. In the absence of such materials, the Tribunal ought not to have allowed the appeal in respect of the assessment year 2002-2003 also. Therefore, T.C.(A).No. 63 of 2010 is allowed and the matter is remitted back to the Assessing Officer to find out as to whether any sales tax return has been filed by the assessee in respect of the assessment year 2002-2003 and to pass a revised assessment order in the light of the order passed in these appeals. All other appeals in T.C.(A) Nos. 59 to 62 of 2010 are dismissed and the question of law raised in all those appeals are answered against the Revenue and in favour of the assessee. No costs.
krr To
1. The Income Tax Appellate Tribunal 'D' Bench, Chennai
2. The Commissioner of Income -Tax, (Appeals) II, Coimbatore.
3. The Deputy Commissioner of Income Tax, Central Circle I, Coimbatore