2009 (11) TMI 393 - HC - Income Tax

Search and Seizure- The assessee was engaged in purchase and sale of liquor. Strangely, two sets of accounts were maintained by the assessee, one for brandy sales and other for other liquor sales. Two set of account were maintained by the assessee, one for brandy sales and another for liquor sales. The total unaccounted income amount to Rs. 24,72,170/-. The Tribunal sustained both addition. High Court directed the Assessing Officer to grant deduction of kist payment. The Commissioner directed the revision order. After receiving the revised order assessee again filed the appeal to Commissioner. The Tribunal however, deleted the addition. Held that- in the first round the Tribunal having sustained the addition, in the second round of appeal, after remand, the Tribunal could not take a different stand. Thus there was no justification in the finding of the Tribunal that the assessee had accounted for the sale in full, when the department collected two sets of accounts maintained by the assessee. Appeal allowed.

Summary

Issues:
Appeal against deletion of suppressed income assessed based on inspection in the assessee's premises.

Analysis:
The judgment delivered by the High Court of Kerala involved an appeal against the deletion of Rs.24,72,170, which was a suppressed income assessed during an inspection at the assessee's premises. The Tribunal had initially sustained the addition of this amount as suppressed income. However, in a subsequent round of appeal, the Tribunal deleted this addition, prompting the appellant to file a further appeal.

The High Court analyzed the case, noting that the assessee maintained two sets of accounts for brandy sales, with discrepancies between the computer statement and the written bills. The Court found that around 70% of the sale consideration was accounted for in the written bills, while the full amount was recorded in the computer statement. This difference represented an excess price realized over the accounted sale price. The Court emphasized that the Tribunal's decision to delete the addition in the second round of appeal was not justifiable, as the assessee's practice of maintaining two sets of accounts indicated discrepancies in the recorded sales. Therefore, the High Court allowed the appeal by reversing the Tribunal's finding and reinstating the addition of Rs.24,72,170 as suppressed income.

In conclusion, the High Court ruled in favor of the appellant, overturning the Tribunal's decision and reinstating the assessment with the originally made addition of the suppressed income. The judgment highlighted the importance of consistency in assessing discrepancies and upheld the need for accurate accounting practices to determine taxable income.