Gujarat High Court
Commissioner Of Income Tax-Vi vs Priya Blue Industries ... on 7 July, 2016
Author: Ks Jhaveri
Bench: Ks Jhaveri, G.R.Udhwani
O/TAXAP/927/2009 JUDGMENT
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 927 of 2009
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
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1 Whether Reporters of Local Papers may be allowed
to see the judgment ?
2 To be referred to the Reporter or not ?
3 Whether their Lordships wish to see the fair copy of
the judgment ?
4 Whether this case involves a substantial question of
law as to the interpretation of the Constitution of
India or any order made thereunder ?
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COMMISSIONER OF INCOME TAX-VI....Appellant(s)
Versus
PRIYA BLUE INDUSTRIES LTD....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
RULE SERVED for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE KS JHAVERI
and
HONOURABLE MR.JUSTICE G.R.UDHWANI
Date : 07/07/2016
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O/TAXAP/927/2009 JUDGMENT
ORAL JUDGMENT
(PER : HONOURABLE MR.JUSTICE KS JHAVERI) By way of this appeal, the appellant Department has challenged the order dated 13/03/2008 passed by the ITAT in IT (SS) A No.107/Rjt/2003 whereby the learned Tribunal has held against the Department reversing the order of CIT (A).
2. While admitting this appeal, following question is posed for our consideration:
"[A] Whether the Appellate Tribunal was right in law and on facts deleting the addition of Rs.79,23,578/ made by the Assessing Officer on account of suppressed sales?
[B] Whether the Appellate Tribunal was right in law and on facts in deleting the addition of Rs.1,16,000/ made by the Assessing Officer on account of unexplained cash credit?"
3. At the outset, it is required to be noted that ITAT by passing common order dated 13/03/2008 has decided total three appeals, wherein one appeal filed by the assessee was allowed. Whereas, other two appeals filed by the Department came to be dismissed. The Revenue has challenged the order in respect of other assessee viz., Sachdeva Steel Products before this Hon'ble Court by filing Tax Appeal No.950 of 2009, which came to be dismissed by making following observations:
"5. The Tribunal has, accordingly, recorded that it was an admitted fact that no material had been found during the Page 2 of 4 HC-NIC Page 2 of 4 Created On Sat Jul 09 01:42:33 IST 2016 O/TAXAP/927/2009 JUDGMENT course of search that the assessee had actually realized more sale consideration than that recorded in the books of accounts. That Shri Mahendra H. Shah had not specifically mentioned the name of the assessee to prove that the assessee was engaged in recording any bogus sales. The Tribunal noted that the Assessing Officer had made the addition merely on the basis of estimate by taking 15% of the sales made by the assessee to be the suppressed consideration received by the assessee. The Tribunal upon verification of the copies of the ledger accounts as produced before it noted that the sale consideration had not been received in cash. The sum received by the assessee had duly been adjusted against the sales and was duly recorded in the regular books of accounts maintained by the assessee. The Tribunal accordingly found that the addition in respect of suppressed sales was made merely on presumptions and assumptions. The Tribunal, was further of the view that addition could have been made under Chapter XIVB of the Act only on the basis of material seized during the course of search and such other material or information as available with the Assessing Officer and relatable to such search. The Tribunal recorded that it was an admitted position that during the course of search that had taken place in the case of Madhupuri Group no evidence had been found showing any undisclosed income of the assessee as defined under Section 158B(b) of the Act. That the sale consideration was received through cheques and was duly recorded in the regular books of account. The Tribunal, accordingly held that regular assessment could not have been substituted by block assessment and dismissed the appeal preferred by the Revenue.
6. It is a well settled legal position, which is also clear from a bare reading of the relevant provisions that an addition under section 158BD of the Act can be made only in respect of the material discovered at the time of search or pursuant to any inquiry made in relation to the search. In the facts of the present case, as is apparent from the facts noted hereinabove, it is an admitted position that during the course of search no material had been found to show any undisclosed income of the assessee. No evidence had been found to indicate that assessee had realized sale consideration other than that recorded in its books of accounts. For the purpose of holding that the assessee had sold goods to fictitious parties at a price 25% higher than that shown in the bills, the Assessing Officer had mainly placed reliance upon the statement of Shri Mahendra H. Shah recorded under Section 132 (4) of the Act. However, as noted hereinabove, Shri Mahendra H. Shah had not specifically mentioned the name of assessee. Thus, no material had been found at the time of search to indicate that the assessee had sold goods at a price higher than that recorded in the books of accounts regularly maintained by it. In the circumstances, the Tribunal was justified in holding that in the facts and Page 3 of 4 HC-NIC Page 3 of 4 Created On Sat Jul 09 01:42:33 IST 2016 O/TAXAP/927/2009 JUDGMENT circumstances of the case the provisions of Chapter XIVB of the Act could not have been resorted to as block assessment cannot take place of regular assessment.
7. In light of the above discussion, it is not possible to state that the Tribunal has committed any legal error so as to warrant interference. In the absence of any question of law, much less, a substantial question of law, the appeal is dismissed."
4. In view of the above, when the Tax Appeal against the order arising out of the similar proceedings in respect of other assessee came to be dismissed, present Tax Appeal arises out of similar proceedings, is accordingly dismissed. The question is answered in favour of the assessee and against the Department.
(K.S.JHAVERI, J.) (G.R.UDHWANI, J.) sompura Page 4 of 4 HC-NIC Page 4 of 4 Created On Sat Jul 09 01:42:33 IST 2016