1994 (12) TMI 128 - AT - Income Tax

Summary

Issues Involved:
1. Addition of Rs. 2,19,065 for non-disclosure of empty bottles in closing stock.
2. Addition of Rs. 30,935 for discrepancy in empty bottle account.
3. Trading addition of Rs. 12,501 due to low gross profit rate.
4. Condonation of delay in filing the appeal.

Issue-wise Detailed Analysis:

1. Addition of Rs. 2,19,065 for Non-Disclosure of Empty Bottles in Closing Stock:
The assessee-firm, dealing in liquor on a retail basis, did not reflect 2,19,065 empty bottles in the closing stock for the accounting period relevant to A.Y. 1985-86. The AO noticed this discrepancy and added Rs. 2,19,065 to the income. The assessee explained that empty bottles were either purchased from the market or supplied by consumers, and a certain percentage was supplied by the distillery at Rs. 2 per bottle. However, the distillery's records did not corroborate the assessee's claim. The CIT(A) confirmed this addition, and the Tribunal upheld the decision, noting that the assessee failed to disclose these bottles in the closing stock.

2. Addition of Rs. 30,935 for Discrepancy in Empty Bottle Account:
The AO noted that the assessee-firm had supplied 30,935 more bottles to the distillery than reflected in the account books, leading to an additional Rs. 30,935 being added to the income. However, the CIT(A) found no justification for this addition and deleted it, directing the AO to make necessary inquiries and take appropriate action if any discrepancy was found. The Tribunal did not address this issue further as the appeal was dismissed on the ground of limitation.

3. Trading Addition of Rs. 12,501 Due to Low Gross Profit Rate:
The AO found the gross profit rate of 3.6% declared by the assessee to be quite low and proposed a trading addition of Rs. 12,501 by applying a g.p. rate of 4%. The IAC approved this addition, but the CIT(A) reduced it to Rs. 8,000. The Tribunal did not delve into the merits of this issue due to the dismissal of the appeal on the ground of limitation.

4. Condonation of Delay in Filing the Appeal:
The appeal was filed late, and the assessee sought condonation of the delay, explaining that the delay was due to the misplacement of appeal papers. The assessee cited affidavits and a precedent from Collector Land Acquisition v. Mst. Katiji [1987] 167 ITR 471 (SC) to argue for a liberal approach in condoning the delay. However, the Tribunal noted that the delay was over four years and was not satisfactorily explained. The Tribunal emphasized that while courts should adopt a liberal attitude in condoning delays, the explanation must be reasonable and credible. The Tribunal found the explanations provided by the assessee to be insufficient and held that the inordinate delay could not be condoned. Consequently, the appeal was dismissed on the ground of limitation, and the Tribunal did not address the merits of the grounds raised in the appeal.

Conclusion:
The appeal was dismissed primarily due to the inordinate delay in filing, which was not satisfactorily explained by the assessee. The Tribunal upheld the addition of Rs. 2,19,065 for non-disclosure of empty bottles in the closing stock and did not find it necessary to address the other issues due to the dismissal on the ground of limitation.