Karnataka High Court
Gemini Distilleries Pvt. Ltd. vs Commissioner Of Income-Tax And Another on 5 August, 1991
Equivalent citations: [1992]196ITR463(KAR), [1992]196ITR463(KARN)
JUDGMENT S. Rajendra Babu, J.
1. The petitioner-firm is common in all these cases and it is calling in question the assessments made for the years 1976-77 to 1979-80 in so far as certain additions that have been made in regard to regard to unexplained income. Against the computations made, the petitioner preferred a revision petition under section 264 of the Income-tax Act, 1961, in respect of the assessments made for all these years. The additions made are :
Rs.
(i) Unaccounted production profit 4,93,020 (ii) Unexplained investment 13,28,560 (iii) Scrap value of materials 57,601.
2. Originally, an addition of Rs. 6,43,545 had been made in the assessment order completed on September 25, 1979, as the sale proceeds of Unaccounted production of 49,903 cases of Indian made foreign liquor. An appeal was carried wherein the Income-tax Officer was directed to make a fresh assessment, after making certain enquiries. Thereafter, the Income-tax Officer made another assessment against which the present revision petition was filed.
3. The assessee in a manufacturer of Indian made foreign liquor and sells the same. It explained the reason as to why there was a low yield of alcohol during a certain period. The Income-tax Officer considered these contentions advanced on behalf of the petitioner and found that some of the submissions made by the assessee were correct and to a noticed by him. However, he did not believe that the yield could be as low as 165.44 litres of rectified spirit per tonne when the assessee itself, under identical conditions, had made a better yield in subsequent accounting ears. Therefore, the Income-tax Officer felt that there was a need to examine the matter in the light of the seized materials and their value on the circumstantial evidence to find out as to what was the unaccounted production. He referred to certain registers maintained and the survey that had been made by the authorities concerned and thereafter he estimated the profit margin in this production at Rs. 30 per case and added a sum of Rs. 4,93,020.
4. The Commissioner reconsidered the matter in the light of the contentions advanced before him. Thought the Commissioner agreed with the contention advanced on behalf of the petitioner that one year's production cannot be compared with another, still with the varying circumstances between the two periods not having been brought out by the assessee concerned, he found that the Income-tax Officer was justified in estimating the unexplained production at 16,434 cases. Instead of valuing each case at Rs. 30, he valued the same at Rs. 15 per case as had been done in the first assessment order. Based on that from unexplained production at Rs. 2,46,510 as against Rs. 4,93,020.
5. The next important addition is in a sum of Rs. 13,28,560, which is the value of unexplained investment. This matter was re-examined by the commissioner and he found that the Income-tax Officer had correctly considered the investment on unaccounted production and thereafter estimated the value and that the Income-tax Officer should substitute this figure for the addition of only Rs. 13,28,560 and affirmed the view taken by the Income-tax Officer.
6. The other point that was argued was in relation to addition of Rs. 57,601 representing the closing stock as on June 30, 1975. The Income-tax Officer found that, on Aught 5, 1980, certain PP caps were lying with the assessee and he estimated the value of the stock at Rs. 19,850 at the rate of 10 paise per cap and arrived at Rs. 37,751 as their value. The total addition on account of this was Rs. 57,601. It was argued that these caps bore the name of Nandi Breweries which was the name of the previous company as it stood earlier and so, the assessee having changed its name to Gemini Distilleries, has no value for these caps. The assessee's contention was accepted and the value in this regard was found to be "nil" and the addition of Rs. 57,601 was deleted. These matters were, therefore, modified by the Commissioner in the revision petition by reducing the additions made to Rs. 15,23,471.
7. However, it is urged before me by learned counsel for the petitioner that the Commissioner could not have made these additions when the very same Commissioner, in a subsequent revision petition against the order made under section 271(1)(c) of the Act, has found that these additions were not justified and did not sustain the penalty that was levied and accordingly set aside the order levying such penalty. If learned counsel's contention that the order impugned herein should be tested in the light of the order made in a revision arising under the order passed under section 271(1)(c) and validity of that order could be tested on the basis of the present order, is correct, then both the orders should be set aside and the matter remitted for reconsideration. When this proposition was made, learned counsel was not prepared for the matter being reconsidered on that basis. Therefore, I do not think that the latter order could be taken as a test to judge the correctness of the order passed in the earlier proceedings. When the Commissioner has considered in detail the various factors in relation to addition made and after a detailed examination of the same, has come to the conclusion that additions should be made in a modified form and has given substantial relief to the petitioner. I do not think that this court should sit once again in judgment under article 226 of the Constitution, particularly when the petitioner is not able to establish or is not in a position to say that the view taken by the Commissioner is perverse, arbitrary, much less contrary to any provision of law. All that learned counsel stated was that when another view can be taken by the Commissioner in proceedings arising out of an order under section 271(1)(c), this order could not be justified. But this argument ignores one important aspect, namely, that the points that arise for consideration under section 271(1)(c) are entirely different and in case of additions, the authority will have independently to consider in dealing with levy of penalties and, in doing so the authority acts as a quasi criminal authority and those considerations are not available to the additions that are made pursuant to the assessment orders. In these circumstances, there is no substance in the contentions advanced on behalf of the petitioner. Therefore, these petitions shall stand dismissed.