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M/s Spintex Internationals v. Commissioner of Income Tax, Ludhiana - ITA-181-2005  RD-P&H 5482 (10 August 2006)
IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH
ITA No. 181 of 2005
Date of Decision: 24.07.2006
M/s Spintex Internationals ......Appellant versus
Commissioner of Income Tax, Ludhiana ......Respondent
CORAM : HON'BLE MR. JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE RAJESH BINDAL
Present: Mr. S.K.Mukhi, Advocate for the appellant This order will dispose of ITA Nos. 181 of 2005 and 182 of 2005 involving similar issues. The counsel sought to argue the case by taking the facts from ITA No. 181 of 2005, accordingly, the facts are being noticed from ITA No. 181 of 2005.
The assessee has approached this court by filing the present appeal against the order passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A' (for short 'the Tribunal') arising out of ITA No.
111/Chandi/99 for the assessment year 1994-95. Primarily raising the question of addition of Rs. 3,75,000/- which was surrendered by the assessee.
ITA No.181 of 2005
Brief facts of the case are that a survey under Section 133-A of the Income Tax Act, 1961 (for short 'the Act') was conducted at the premises of the assessee on October 21, 1993. Keeping in view the discrepancies and mistakes in the books of accounts as well as quantum of stocks, found the assessee surrendered a sum of Rs. 13 lakh as income. It was stated by the assessee that the amount will be added in the book profits and tax will be paid thereon accordingly. However, at the time of filing of return, the assessee declared total income of Rs. 9, 25,924/- after crediting the surrendered amount in the trading account and not directly as profit.
During the course of assessment,it was found that the assessee had shown abnormal low GP rate during the assessment year in question. When this discrepancy was confronted to the partners, they voluntarily surrendered a sum of Rs. 3,75,653/- to bring the GP rate near to the GP rate of the previous year. Addition in the income was made accordingly. The assessee failed in his appeal before the Commissioner of Income tax (Appeals) (for short 'the CIT (A)') as the assessee could not satisfy the CIT (A) that the surrender was made by the assessee under some misconception or was not voluntary.
Still being not satisfied with the order passed by the CIT(A), the assessee went in appeal before the Tribunal. The Tribunal while concurring with the findings recorded by the CIT(A) dismissed the appeal filed by the assessee. The relevant paras of the order of the Tribunal are extracted below:-
ITA No.181 of 2005
2.11.On the other hand, this surrender by the assessee appears have been made voluntarily and in normal circumstances; firstly because once the assessee has surrendered a sum of Rs. 13 lakhs during the survey and still was showing abnormally low GP rate in the return over a huge turn over than that in the preceding year, the Assessing Officer was justified in confronting this fact to the partners of the assessee and asking for the explanation for such a low GP rate. In those circumstances, in case the assessee chose to agree for the impugned addition at a GP rate of the preceding year, there is nothing unusual and does not make the surrender unusual or under pressure from the AO. We are of the opinion that this concocted story of the assessee in making a surrender under pressure by the AO due to an dispute between the partners, is simply an after thought to wriggle out of the agreed addition, more so when the assessee failed to explain how on account of dispute between the partners, being internal matter of the assessee, the ITO could pressurize the assessee for this agreed surrender. We also have considered the case law (supra) relied upon by the Ld.AR for the assessee on this issue but we find that in all the cases (supra) relied upon by the Ld.
AR for the assessee, the surrender was made during the survey wherein the courts concluded that the surrender was made under pressure by the assessee in those circumstances, whereas, in the instant case, the impugned surrender has been made by the assessee during the course of assessment proceedings when he was called by the Assessing Officer to explain the low G.P. Shown in the return, so the same cannot be called unusual nor such surrender made by the assessee in place of explanation called by the Assessing Officer during the assessment proceedings could be called unusual or under pressure of the Assessing Officer.
ITA No.181 of 2005
2.12 In these facts, we find that the ratio of the decision (supra) given in the cases relied upon by the Ld. AR for the assessee is of no assistance to the assessee. Hence we hold that the assessee has failed to prove that the impugned surrender of Rs. 3,75 lakhs made before the Assessing Officer during the assessment proceedings was made under pressure by the Assessing Officer. Accordingly, the first issue is decided against the assessee and ground No.1 of the appeal of the assessee relating to this issue is rejected.
From the perusal of the above findings, it is clear that even before the Tribunal, the assessee failed in his plea to prove that the surrender was not voluntary or the same was under unusual circumstances or was under any misconception. Against the concurrent findings of the fact recorded by all the authorities under the Act on the issue of surrender being voluntarily and without any misconception, the assessee has filed the present appeal. Main contention of the assessee is that the authorities below have not appreciated the facts of the case and have come to a wrong finding and concluded that the surrender made by the assessee was voluntarily and without any misconception.
According to the counsel, the assessee had retracted from the surrender. In our view, no substantial question of law arise out of the pleadings or the contention raised by the assessee as it is a definite finding of fact recorded by all the authorities considering the material on record which clearly shows that the surrender made by the assessee was voluntarily ITA No.181 of 2005
and without any misconception, the same having been made at a juncture when the assessee could not explain the discrepancies in the account and the GP rates. The case of the assessee is not that the surrender made by him was contrary to any law.
The view taken by the authorities cannot in any way said to be perverse or an impossible view in the facts and circumstances of the case available on record. The authorities have come to the only possible conclusion in the facts and circumstances of the case.
In view of our above discussion, we do not find any substantial question of law arise in the present appeals. Accordingly, the appeals are dismissed.
July 24 ,2006 (ADARSH KUMAR GOEL)
ITA No.181 of 2005
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