Ashish Plastic Industries v. Assistant Commissioner of Income-tax
[Citation -2015-LL-0323-1]

Citation 2015-LL-0323-1
Appellant Name Ashish Plastic Industries
Respondent Name Assistant Commissioner of Income-tax
Court SUPREME COURT
Relevant Act Income-tax
Date of Order 23/03/2015
Assessment Year 1992-93, 1993-94
Judgment View Judgment
Keyword Tags closing stock • registered firm • sister concern • stock register • substantial question of law • unaccounted sales
Bot Summary: During the course of survey operations, the stock at the premises was physically verified by the survey party and the total stock of the value of Rs. 16,92,420 was found. It was found that the sales of the finished product of 32,809 Kgs. as shown in the sales register of the sister concern tallies with the impounded stock register. Notwithstanding the aforesaid finding which vindicated the stand of the assessee to the aforesaid extent, it was further found that the sale of 33,682 Kgs. of finished goods was nothing but unaccounted sales out of which 32,809 Kgs. sales was made to the aforesaid sister concern of the assessee. Taking into consideration this aspect, the Commissioner upheld the order of the assessing authority justifying the additions made on account of unaccounted production, sales and closing stock of the finished products. He drew our attention to the orders dated February 27, 2004, which reads as under: Leave granted limited to the question as to whether in respect of sales of 32,809 kgs. It is clear from the above that leave was granted limited to the question as to whether the addition made on account of the aforesaid sale would amount to double taxation. For this purpose we remand the case back to the assessing authority, who shall give an opportunity to the assessee to demonstrate as to whether the sister concern has already paid the tax on the aforesaid income from the aforesaid sales and if that is shown, to the extent tax is paid, benefit shall be accorded to the appellant.


JUDGMENT Order appellant-assessee is registered firm engaged in business of manufacture of PVC pipes of different varieties and sizes. Survey operations were conducted by income-tax authorities under section 133A of Income -tax Act, 1961 (hereinafter referred to as "the Act"), at factory premises of assessee on September 23, 1993. During course of survey operations, stock at premises was physically verified by survey party and total stock of value of Rs. 16,92,420 was found. Statement of both partners were recorded under section 131 of Act. In said statement, it was admitted that stock as per books was around Rs. 3 lakhs and excess stock of Rs. 13,92,000 was, accordingly, admitted. On this basis, addition was made and assessment order was passed by assessing authority in respect of assessment years 1992-93 and 1993-94. Before Commissioner (Appeals), appellantassessee sought to explain this difference by alleging that up to September 23, 1993, sales of 32,809 Kgs. of finished products was made by one of sister concerns of assessee, namely, M/s. Ashish Agro Plast P. Ltd. and same was wrongly shown to be that of assessee. On this plea taken by assessee, in support of which some documents/materials were also filed. Commissioner (Appeals) asked for remand report from assessing authority. Before assessing authority, representatives of assessee were asked to produce books of account of M/s. Ashish Agro Plast P. Ltd. for assessment years 1993-94 and 1994-95. It was found that sales of finished product of 32,809 Kgs. as shown in sales register of sister concern tallies with impounded stock register. It was also found that sales proceeds was received by sister concern, namely, M/s. Ashish Agro Plast P. Ltd. through its bank account in Bank of Baroda, Dudheshwar Road Branch, Ahmedabad. cheques received against those sales were cleared even prior to date of survey. Notwithstanding aforesaid finding which vindicated stand of assessee to aforesaid extent, it was further found that sale of 33,682 Kgs. of finished goods was nothing but unaccounted sales out of which 32,809 Kgs. sales was made to aforesaid sister concern of assessee. Taking into consideration this aspect, Commissioner upheld order of assessing authority justifying additions made on account of unaccounted production, sales and closing stock of finished products. This order has been upheld by Income-tax Appellate Tribunal as well as High Court. In fact, High Court dismissed appeal of assessee preferred under section 260A of Act on ground that no substantial question of law arose. Normally, going by aforesaid facts noted, High Court may be correct in its observation that no substantial question of law arose. However, learned counsel for appellant-assessee has brought to our notice different aspect which was raised at time of admission of present special leave petition filed by appellant. He drew our attention to orders dated February 27, 2004, which reads as under: "Leave granted limited to question as to whether in respect of sales of 32,809 kgs., which are shown in stock register of M/s. Ashish Agro Plast P. Ltd., there has been double taxation." It is clear from above that leave was granted limited to question as to whether addition made on account of aforesaid sale would amount to double taxation. To put it differently, submission of learned counsel for appellant is that on aforesaid sales, which are found in accounts of M/s. Ashish Plastic Industries, receipts are shown as income on which tax has been paid by M/s. Ashish Agro Plast P. Ltd. During hearing of this appeal, learned counsel submitted that he can bring satisfactory evidence in support of this plea. We are of view that order of authorities below should be sustained but if appellant is able to prove that tax on income generated from sale of aforesaid 32809 Kg. of material has been paid by M/s. Ashish Agro Plast P. Ltd. benefit thereof should be extended to appellant. For this purpose, therefore, we remand case back to assessing authority, who shall give opportunity to assessee to demonstrate as to whether sister concern has already paid tax on aforesaid income from aforesaid sales and if that is shown, to extent tax is paid, benefit shall be accorded to appellant. appeal stands disposed of. *** Ashish Plastic Industries v. Assistant Commissioner of Income-tax
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