Madras High Court
Commissioner Of Income Tax vs M/S.Anandha Metal Corporation on 23 July, 2004
Author: P.D.Dinakaran
Bench: P.D.Dinakaran
IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED:23/07/2004 CORAM THE HONOURABLE MR.JUSTICE P.D.DINAKARAN AND THE HONOURABLE MR.JUSTICE N.KANNADASAN T.C. (A) No.235 of 2004 Commissioner of Income Tax Chennai-IX. ... Appellant -VS- M/s.Anandha Metal Corporation Chennai-600 003. ... Respondent Prayer: Appeal Under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal Chennai 'A' Bench dated 12.5.2003 in I.T.A.No.1072/Mds/99. !For Appellant : Mr.K.Subramaniam Standing Counsel for the Department ^For Respondent : ------- :O R D E R
(Order of the Court was made by P.D.DINAKARAN, J.) The appeal is directed against the order of the Income Tax Appellate Tribunal dated 12.5.2003 made in I.T.A.No.1072/99, on the following substantial questions of law:-
1.Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the addition of Rs.2,49,173/- made u/s.69 of the Income Tax Act being the difference between the value of closing stock as found in the seized document and the value of Rs.7,51,186/- admitted by the assessee?
2.Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the addition of Rs.2,49,173/- when under law, the onus of proving that the difference did not represent undisclosed income was on the assessee?
3.Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the addition being the difference between the value of closing stock as found in the seized document and the value of Rs.7,51,186/- admitted by the assessee considering irrelevant evidence and disregarding relevant evidence?
2. In brief, there was a search under Section 132 of the Income Tax Act in the premises of the assessee on 13.10.1993, pursuant to which a notice under Section 148 was issued on 22.11.1995, based on the documents seized on 13.10.1993 to reopen the case for the assessment year 1993-94. The assessee submitted an explanation, requesting the assessing officer to treat the return filed on 31.7.1995 as a return filed in response to the notice u/s.148. During the search operation, a notebook was seized which showed closing stock to the value of Rs.7 ,51,186/- as on 31.3.1993. Another note-book was also seized from the assessee's premises which showed the closing stock to the value of Rs.10,00,359/-. As there was no satisfactory explanation for the difference of Rs.2,49,173/-, the said amount was brought to tax under Section 69 of the Act. Aggrieved by the same, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who accepted Rs.7,51,186/- as the value of the closing stock of the assessee and the same was also confirmed by the Income Tax Appellate Tribunal by an order dated 13.5.2003, against which the above appeal has been preferred by the appellant/Revenue. Precisely, both the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal have proceeded on the basis of the return submitted before and accepted by the Commercial tax authorities.
3. Mr.Subramaniam, learned counsel for the department seriously contends that the closing stock value of Rs.7,51,186/- submitted before and accepted by the Commercial tax department, is not binding on the income tax authorities and therefore the differential value between the two books of accounts seized from the premises of the assessee to the tune of Rs.2,49,173/- is taxable and thus raised the three substantial questions of law referred to above.
4. A closer reading of these three substantial questions of law boils out to the contention whether the finding arrived at by the Commercial Tax Department, which got concluded under the relevant Act is binding on the respondent/revenue department, and/or, notwithstanding the return submitted before the Commercial tax department as closing stock to the value of Rs.7,51,186/- the appellant/revenue would still take the difference of Rs.2,49,173/- between the two books of accounts seized from the premises of the assessee for taxation.
5. It is trite law that the assessing officer, while computing the income tax has only the power of examining whether the books of accounts are certified by competent authority. In APOLLO TYRES -VS- COMMISSIONER OF INCOME TAX (255 ITR 273), where a question came up for consideration as to what extent the accounts scrutinized and certified by the authorities under the Companies Act with reference to the books of profit as well as net profit, particularly net profit in the profit and loss account prepared in accordance with Parts II and II to Schedule II of the Companies Act is binding on the assessing officer under the Income Tax Act, the Apex Court held that the assessing officer has only the power of examining whether the books of account are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act.
6. That apart, any falsification in the books of account submitted before the authorities under the Companies Act would have the penal consequence, and the position of law, in our considered opinion, is the same under the Tamil Nadu General Sales Tax Act (hereinafter referred to as 'TNGST' Act) in view of Section 45(7) of the TNGST Act, which reads as follows:-
"Any person, who is in any way unknowingly concerned in any fradulent evasion or attempt at evasion or abetment of evasion on any tax payable in respect of the sale or purchase of any goods under this Act, shall on conviction be liable to simple imprisonment, which may extend to six months or a fine which may extend to Rs.2,000/- or both."
7. If that be so, 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 T.N.G.S.T. Act, is, in our opinion, binding on the income tax authorities and the assessing officer, therefore, has no power to scrutiny the return submitted by the respondent/assessee to the commercial tax department under the provisions of the TNGST Act and as accepted by the said authorities, unless otherwise it is varied or modified by the authorities under the TNGST Act. Therefore, the assessing officer does not have any jurisdiction to go beyond the value of the closing stock declared by the respondent assesee and accepted by the Commercial tax department.
8. In that view of the matter, we are not inclined to appreciate any of the substantial question of law raised and the appeal is devoid of merits and legal contentions and the same is dismissed.
Index : Yes Internet: Yes KST.
To
1.The Assistant Registrar,Income Tax Appellate Tribunal Madras Bench "A", Rajaji Bhavan III Floor, Besant Nagar, Chennai-90.
2.The Secretary, Central Board of Direct Taxes, New Delhi.
3.The Commissioner of Income Tax (Appeals)-II, Chennai.
4.The Assistant Commissioner of Income Tax Central Circle I(4), Chennai-34.