Manmandir Cloth Centre Vs PCIT (ITAT Pune)
The Income Tax Appellate Tribunal (ITAT), Pune Bench, dismissed an appeal filed by Manmandir Cloth Centre, a partnership firm, challenging an order from the Principal Commissioner of Income Tax (PCIT), Nashik-1, related to Assessment Year 2019-20. The firm’s appeal was dismissed after repeated non-appearance by the assessee during multiple hearing dates, leading the Tribunal to decide the matter based on the available record and arguments from the Departmental Representative (DR).
The case stemmed from a survey action conducted under Section 133A of the Income Tax Act on March 6, 2019. During the survey, the firm declared an additional income of Rs. 19,44,000, consisting of Rs. 11,62,873 on account of excess stock and Rs. 7,81,127 on account of excess cash, which were found unrecorded in the books of account.
During the original assessment under Section 143(3), the Assessing Officer (AO) determined the firm’s total income at Rs. 9,79,800, making an addition of only Rs. 7,81,127 under Section 69A as additional income declared due to excess stock.
The PCIT subsequently examined the record and noted that the AO’s assessment was erroneous and prejudicial to the interests of the Revenue because the AO failed to make due verification and inquiries. The PCIT observed that the AO had failed to assess the entire declared amount of Rs. 19,44,000 by properly classifying it as unexplained investment (excess stock) under Section 69 and unexplained money (excess cash) under Section 69A. Crucially, the AO also failed to apply the penal tax provisions of Section 115BBE of the Act to the entire sum. The PCIT emphasized that since the income was disclosed only after the survey action, it was not a voluntary disclosure, making Sections 69 and 69A squarely applicable, necessitating taxation under Section 115BBE.
