Case Law Details
CIT Vs. V R Textiles (Ahmedabad High Court)- The Tribunal further noted that the assessee had not placed any material to depict whether it had made any claim before the Income Tax Officer or at the stage of appeal. It had not disputed the income as well as sales made outside the books of account and had also paid the excise duty. By further noting that the Excise Department had noted that the assessee has made unaccounted sales of Rs. 3.86 Crores, the CIT {A} was justified in taking the figure of unaccounted sales computed by the excise authorities as against the figure worked out by the Assessing Officer.
On the ground that the entire undisclosed sales could not be treated as profit of the assessee, relying on the judgement of this Court in the case of CIT v. President Industries Limited, [258 ITR 654 (Guj)], it upheld the findings of the CIT [A] which applies the gross profit ratio against the unaccounted sales for the purpose of making additions on account of undisclosed income. The Tribunal also ratified the decision of the CIT [A] in considering the issue of deployment of minimum capital investment for the purpose of making and rotating the sales outside the books of account. For not having found anything contrary to the findings arrived at by the CIT [A] and on cumulatively examining the facts, which were presented before the Tribunal, it upheld the findings of the CIT [A] which applied the gross profit ration as against the undisclosed sales made by the assessee for the purpose of making the additions. Thus, it could be seen from the order of the Tribunal, on proper appreciation of facts and material on record, it concluded the issue in favour of the assessee and against the Revenue. It found sufficient material on record to uphold the findings arrived at by the CIT [A] and for so doing, it had given cogent reasons in its order
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL No. 1828 of 2010
COMMISSIONER OF INCOME TAX- III
Versus
V R TEXTILES
Date of Decision- 5th December 2011
ORAL ORDER
(Per : HONOURABLE MS JUSTICE SONIA GOKANI)
Challenge in the present Tax Appeal preferred under Section 260A of the Income Tax Act, 1961 [“Act” for short] is to the order of the Income Tax Appellate Tribunal, Ahmedabad [“Tribunal” for short] dated 22nd March 2010, proposing following substantial question of law :-
“Whether the Appellate Tribunal is right in law and on facts in reducing the addition made on account of unaccounted sales of man made fabrics from Rs. 4,58,65,874/= to Rs. 75,80,523/= ?”
Briefly stated, the facts of the case are – the assessee, who is engaged in the business of selling the clothes had, for the Assessment Year 2003-04, filed the return of income. The assessment was finalised at Rs. 4,78,01,723/= against the return income of Rs. 19,45,850/=. Thus, an addition of Rs. 4,58,56,874/= was made by the Assessing Officer on account of unaccounted sales. It noted certain discrepancies, after survey under Section 133A of the Act was conducted viz., that the physical stock was found short to the tune of Rs. 1,52,656/=; unexplained investment in plant and machinery & factory premises of Rs. 3,50,000/= & Rs. 6,00,000/= respectively and excess cash of Rs. 4,00,000/=, and accordingly, addition was made by the Assessing Officer by invoking the provision of Section 145 of the Act, treating the entire unaccounted sales as “undisclosed income” of the assessee.
This was challenged before the CIT [A] which reduced the additions from Rs. 4,58,56,874/= to Rs. 3,86,14,825/= thereby giving respite to the assessee to the tune of Rs. 72,00,000/= [rounded off].
Revenue had challenged this order of CIT [A] before the Tribunal and had noted that there was no discrepancy noted during the course of survey by the Department. Assessee had surrendered additional income of Rs. 15,02,656/= on account of shortage in stock and unaccounted investment made in plant & machinery. The Tribunal further noted that the assessee had not placed any material to depict whether it had made any claim before the Income Tax Officer or at the stage of appeal. It had not disputed the income as well as sales made outside the books of account and had also paid the excise duty. By further noting that the Excise Department had noted that the assessee has made unaccounted sales of Rs. 3.86 Crores, the CIT {A} was justified in taking the figure of unaccounted sales computed by the excise authorities as against the figure worked out by the Assessing Officer. On the ground that the entire undisclosed sales could not be treated as profit of the assessee, relying on the judgement of this Court in the case of CIT v. President Industries Limited, [258 ITR 654 (Guj)], it upheld the findings of the CIT [A] which applies the gross profit ratio against the unaccounted sales for the purpose of making additions on account of undisclosed income. The Tribunal also ratified the decision of the CIT [A] in considering the issue of deployment of minimum capital investment for the purpose of making and rotating the sales outside the books of account. For not having found anything contrary to the findings arrived at by the CIT [A] and on cumulatively examining the facts, which were presented before the Tribunal, it upheld the findings of the CIT [A] which applied the gross profit ration as against the undisclosed sales made by the assessee for the purpose of making the additions. Thus, it could be seen from the order of the Tribunal, on proper appreciation of facts and material on record, it concluded the issue in favour of the assessee and against the Revenue. It found sufficient material on record to uphold the findings arrived at by the CIT [A] and for so doing, it had given cogent reasons in its order. For having found no material to come to any conclusion that the order of the Tribunal is suffering from any infirmity, or has given rise to any question of law for the consideration of this Court, this Tax Appeal requires no further meritorious consideration, and is therefore, dismissed.
