2016 (5) TMI 1172 - AT - Income Tax

Suppression of sales - Held that - When the assessee had filed annual return showing higher turnover and paid the amount of CST on the basis of CST sales reported in annual return and this is not shown to us that any rectification request was made before sales tax authority or that any refund was received or claimed from the sales tax authority on account of higher amount of CST sales reported in annual return by mistake this is not acceptable that there is a mistake in the amount of CST sales as per the annual return filed before the sales tax authority. Monthly returns are filed earlier after each month and thereafter annual return is filed after the end of the financial year and in the present case the annual returns for the financial year 2004-05 was filed on 01-06-2005. Hence it cannot be claimed that there is a mistake in the annual return only on this basis alone that figure of sale reported in monthly return is less as compared to figure of turnover reported in annual return because the annual returns are filed after proper verification and generally we find that there may be mistake in the monthly return and not in the annual return. Mere comparison with the monthly return is not sufficient particularly when there is no rectification application filed before the sales tax authority asking for rectification in annual return and asking for refund of excess sales tax paid on the basis of mistake in the annual return. Hence we find that no merit in this contention that there is mistake in the annual return - Decided against assessee Addition of difference between the value of stocks falsely declared to Canara Bank as at 31-03-2004 and 31-03- 2005 - Held that - We find that as per the Tribunal s order in assessee s own case for assessment year 2004-05 wherein it was held that closing stock as on 31-03-2004 should be considered as opening stock on 01-04-2004 relevant for the assessment year 2005-06. In the present year the closing stock as per stock statement given to Canara Bank as on 31-03-2005 is 51.70 lakhs. The closing stock as per the stock statement submitted to Canara Bank as on 31-03-2004 was of 35, 74, 910/- and the AO made the addition of difference amount only of 15, 95, 091/-. This is in line with the Tribunal order in assessee s own case for the assessment year 2004-05 - Decided against assessee Addition of bogus creditors - Held that - The addition in dispute as per this ground of 7.24 lakhs is in respect of these creditors. It is also noted by the learned CIT(A) that even in appeal the assessee could not establish anything better. The assessee has filed confirmation of these three creditors by way of additional evidence on pages 338 to 340 of the paper book but this is not a case where confirmation was not available earlier. In fact these three creditors filed confirmation before the AO also and they appeared before the AO and confirmed only part amount of the credits and the AO allowed the benefit to the extent of credit amount confirmed by these creditors. There is nothing brought on record before any of the authorities below or before us that why these parties confirmed only part of the amount of the credit when they appeared before the AO. Therefore on the basis of these confirmation letter submitted before us as additional evidence no relief can be allowed to the assessee in view of the fact that these parties appeared before the AO and confirmed only part amount of credit and nothing has been brought on record by the assessee to show that there was any mistake in the statement of these three parties before the AO as per which they confirmed only part amount of credits - Decided against assessee Unexplained cash deposit - Held that - The entire amount of closing stock of earlier year has been considered by the AO as opening stock of the present year and the additions was made by the AO to the extent of excess of closing stock of the present year over such opening stock. It means that the entire amount of opening stock has been considered as part of the closing stock of the present year and therefore such opening stock cannot be available for explaining cash deposit in the bank because even if it is held that opening stock was sold and the sale price was used for purchasing different items which were available in closing stock then also G.P addition has to be made in respect of such sales out of opening stock. Under these facts the assessee does not deserve any relief on this point. Moreover ld.CIT(A) has no power to set aside the matter to the file of the AO and he has to decide the issue himself and if required he may obtain remand report from the AO. In the present case ld.CIT(A) has restored the matter to the file of the AO with some directions. The order of the ld. CITA) is not sustainable and therefore we set aside his order on this issue and restore the matter back to his file for a fresh decision Validity of assessment - period of limitation - Held that - We find that as per the provisions of sub-sec.2A of sec. 153 of the IT Act 1961 the AO had to pass a consequential assessment order after setting aside of the matter to his file by the Tribunal as per its order u/s 254 of the IT Act. The present assessment order had been passed by the AO after passing of the order by the Tribunal u/s 254(2) of the IT Act as per which the scope of the original Tribunal order was enlarged by the Tribunal and therefore we find force in the submission of the ld. DR of the revenue that the period of limitation as provided in sub-sec.2A of sec.153 has to be considered from the receipt of this order in M.P. in the office of CIT and when this is done than it is clear that the present assessment order is not time barred because the same is passed before the expiry of one year from the end of FY in which the order u/s 254(2) of the IT Act was passed by the Tribunal. - Decided against assessee.

Summary

Issues Involved:
1. Alleged suppression of sales.
2. Addition to gross profit based on stock declared to the bank.
3. Treatment of certain creditors as bogus credits.
4. Unexplained cash deposits in the overdraft account.
5. Inflation in purchases.
6. Timeliness of the assessment order.

Detailed Analysis:

1. Alleged Suppression of Sales:
The assessee argued that the discrepancy in sales figures between the books and the annual return was due to an error in the annual return. The Tribunal found that the annual return showed a higher turnover of ?1035.28 lakhs compared to ?1028.93 lakhs in the books. The Tribunal held that the assessee did not provide sufficient evidence to prove a mistake in the annual return, such as a rectification application or a refund claim for excess sales tax paid. Therefore, the addition based on the higher figure in the annual return was upheld.

2. Addition to Gross Profit Based on Stock Declared to the Bank:
The assessee conceded that this issue was covered against them by a previous Tribunal order. The closing stock declared to the bank was higher than what was recorded in the books. The Tribunal confirmed the addition of ?15,95,091/- as it was consistent with the previous year's decision, where the discrepancy was partially attributed to purchases from undisclosed sources.

3. Treatment of Certain Creditors as Bogus Credits:
The assessee submitted confirmatory letters for some creditors as additional evidence. However, the Tribunal noted that these creditors had appeared before the AO and confirmed only part of the credits. Since the assessee did not provide any new evidence to explain the discrepancy, the addition of ?7,24,000/- was upheld. Similarly, for another set of creditors amounting to ?11,88,000/-, the Tribunal found no evidence to establish the genuineness of these credits and upheld the addition.

4. Unexplained Cash Deposits in the Overdraft Account:
The CIT(A) had directed the AO to work out the peak credits and make appropriate additions. The Tribunal noted that the CIT(A) had no power to set aside the matter to the AO and should have decided the issue himself. Therefore, the Tribunal set aside the CIT(A)'s order and restored the matter to his file for fresh decision, directing him to decide the issue himself after obtaining a remand report if necessary.

5. Inflation in Purchases:
The assessee argued that the purchases of Arabica coffee were recorded as Robusta coffee. The Tribunal found that the assessee failed to produce credible evidence to support this claim. The CIT(A) had modified the unaccounted purchases to ?80,98,625/- based on a remand report. The Tribunal upheld this decision, noting that the assessee could not provide any new evidence to challenge it.

6. Timeliness of the Assessment Order:
The assessee argued that the assessment order was time-barred. However, the Tribunal found that the period of limitation should be considered from the date of the Tribunal's order on the revenue's miscellaneous petition, which extended the scope of the original order. Therefore, the assessment order was not time-barred.

Separate Judgments:
- For the assessment year 2005-06, the appeals of both the assessee and the revenue were partly allowed for statistical purposes.
- For the assessment year 2006-07, the appeals of both the assessee and the revenue were dismissed.

Conclusion:
The Tribunal upheld several additions made by the AO, found no merit in the assessee's claims regarding errors in the annual return and the recording of purchases, and directed the CIT(A) to decide certain issues himself instead of remanding them to the AO. The appeal regarding the timeliness of the assessment order was dismissed as the order was found to be within the limitation period.