Case Law Details
ACIT Vs Kantilal Exports (Supreme Court of India)
Supreme Court held that addition u/s 69C as unexplained income sustained as based on search conducted in group concern it was found that assessee was maintaining the books of accounts outside regular books.
Facts- AO made additions of Rs. 17,15,00,000/- as unexplained expenditure u/s. 69C of the Act taking into consideration the actual consumption of diamonds as 4,30,701.14 carats as mentioned in the audit report and after considering the consistent trend on yield which was found to be between 10-18%. AO also considered the alternative prayer made by the assessee on claiming deduction as expenditure u/s. 80HHC. The CIT (Appeals) reversed the addition. The ITAT, on appreciation of the entire material on record and even after taking into consideration the remand order which was necessitated due to the affidavits filed before the ITAT of the Typist and the Chartered Accountant, reversed the order passed by the CIT (Appeals) and restored the Assessment Order by upholding the addition of Rs.17,50,00,000/- as unexplained expenditure under Section 69C of the Act.
By the impugned judgement and order, the High Court has set aside the order passed by the ITAT solely relying upon the two affidavits – one of the Typist and another of the Chartered Accountant and accepted the submission on behalf of the assessee that there was a typographical error in the audit report in which the consumption was shown at 4,30,701.14 carats and that the actual consumption was 2,90,701.14 carats.
Conclusion- Solely relying upon the statements of the Typist and the Chartered Accountant, the High Court has reversed the findings of the Assessing Officer as well as the ITAT. The High Court has also not properly appreciated and considered the fact that the affidavits were filed for the first time before the ITAT. The High Court has also not at all considered the conduct on the part of the assessee, which came to be considered in detail by the ITAT in the order passed by the ITAT. It was found that there has been search in the case of the assessee and its group concern on 07.01.1999 which was concluded on 23.03.1999 and during the course of the search, duplicate cash book, ledger and other books showing the unaccounted manufacturing and trading arrived at by the assessee in diamonds were found. The ITAT has also noted that the huge addition was made in the case of assessee’s group in the block assessment on the basis of the books so found. Therefore, it was found that the assessee was maintaining the books of accounts outside the regular books. The aforesaid has not at all been considered by the High Court, while passing the impugned order.
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