Quality Liquor Agencies v. The Assistant Commissioner of Income-tax, Central Circle, Managalore
[Citation -2015-LL-0406-35]

Citation 2015-LL-0406-35
Appellant Name Quality Liquor Agencies
Respondent Name The Assistant Commissioner of Income-tax, Central Circle, Managalore
Court HIGH COURT OF KARNATAKA
Relevant Act Income-tax
Date of Order 06/04/2015
Judgment View Judgment
Keyword Tags unexplained investment • undisclosed income • business premises • block assessment • regular return • block period • cash payment
Bot Summary: In the return of undisclosed income filed, the firm has declared only Rs.1,50,821/- as its undisclosed income for the block period. The learned counsel Sri S Parthasarthy appearing for the appellant argued that Rs.164158/- was declared in the regular return filed by the assessee for the assessment year 2003-04 as it represented the income earned between 1.4.2002 to 12.9.2002. The learned counsel placing reliance on Section 158(BA)(3) of the Act submitted that if any part of the income relates to an assessment year for which the previous year has not ended or the date of filing the return of income under Section 139(1) for any previous year has not been expired, and if such income are recorded in the books of accounts or 5 other documents, the said income shall not be included in the block period. The learned counsel elaborated his arguments contending that two sets of accounts were maintained by the assessee and in one set, this income was recorded and the assessee has also filed the returns disclosing this income of Rs.164158/- in the returns filed for the assessment year 2003-04 and as such, the Tribunal without appreciating these material facts, has brought this amount of Rs.1,64158/- as undisclosed income falling under the block period. Per contra, learned counsel Sri K V Aravind appearing for the department contended that subsequent to the search conducted on 12.9.2002, the amount of Rs.164158/- was disclosed in the returns filed for the assessment year 2003-04, the assessee-firm had not maintained the regular books of accounts, the said undisclosed income would have gone unnoticed and has come to light only on the search conducted by the department. After hearing the parties and perusing the material on record, we have noticed that as per the submissions made by the learned counsel for the appellant, the learned counsel admits that the appellant is maintaining two sets of accounts which 7 is not permissible in law merely because subsequent to the search held an 12.9.2002, the assessee has filed the returns for the assessment year 2003-04 disclosing the amount of Rs.1,64,158/- held to be undisclosed income, would not carry any conviction. The reliance placed on by the learned counsel on Section 158(BA) and Annexure C said to be a document maintained by the assessee-firm disclosing the details of said undisclosed income is not acceptable since the said document is very vague, without having the details of dates and the proof of the transaction said to have been effected with the parties except the parties names and the amount.


1 IN HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS 6TH DAY OF APRIL 2015 PRESENT HON BLE MR.JUSTICE VINEET SARAN AND HON BLE MRS.JUSTICE S SUJATHA ITA NO.498/2009 BETWEEN: M/S QUALITY LIQUOR AGENCIES SOUZA CASHEW COMPOUND KULSHEKAR, MANGALORE-575005 REP BY ITS PARTNER MR SUNIL KUMAR , 49 YEARS, SON OF SRI K S ACHAR ... APPELLANT (BY SRI S PARTHASARATHI, ADV) AND ASSISTANT COMMISSIONER INCOME TAX CENTRAL CIRCLE R NO 202, CENTRAL REVENUE BUILDING, ATTAVARA, MANAGALORE-575001 ... RESPONDENT (BY SRI K V ARAVIND, ADV ) This ITA is filed u/S.260-A of I.T.Act, 1961 arising out of Order dated 26-06-2009 passed in IT(SS)A No.59/BNG/2008, for Block Assessment Period 1.4.96 to 12.9.02, praying that this Hon'ble Court may be pleased to: (i) formulate substantial questions of law stated therein, (ii) allow appeal 2 and set aside order passed by ITAT Bangalore in IT(SS)A No.59/BNG/2008,dated 26-06-2009 in interest of justice and equity. THIS APPEAL COMING ON FOR FINAL HEARING THIS DAY, SUJATHA J., DELIVERED FOLLOWING: JUDGMENT order dated 26.06.2009 passed by ITAT Bench, Bangalore is challenged in this appeal. appeal pertains to block period 1.4.1996 to 12.9.2002. following questions of law are involved in this appeal: Question No.1: Whether tribunal was justified in upholding inclusion of Rs.164158/- being income from SECONDS for period 1.4.2002 to 12.9.2002 in block assessment when said income did not fall within definition of undisclosed income under S 158BA of Income tax Act 1961? Question No.2: Whether transaction of SECONDS having been recorded in normal course in ledger maintained, income there from for period 1/4/2002 to 12/9/2002 was excludable from Block Assessment in light of provision of s 158BA? Question No.3: Whether investment of Rs.2.5 lacs in firm Kaveri Bar & Restaurant constituted by some of partners of Appellant could be attributed to 3 Appellant without sufficient material to justify addition of unexplained investment of Appellant in Block Assessment under S 158B(b)? 2. Facts in brief: appellant is engaged in wholesale liquor business. search was conducted under Section 132 of Income Tax Act, 1961 (herein after referred to as Act for short) at business premises of assessee firm/appellant on 12.09.2002 and at residential premises of Sri.Sunil Kumar, partner of firm. Certain material containing agreements with Mr. Elias Gerald D Silva for purchase of Kaveri Bar was found and seized. Similarly, certain materials relating to unaccounted sale of firm were also found and seized. Shri. Sunil Kumar, partner of firm, admitted undisclosed income of Rs.3,14,979/- and offered same for tax in hands of firm. However, in return of undisclosed income filed, firm has declared only Rs.1,50,821/- as its undisclosed income for block period. Assesments were framed under Section 158 BC read with Section 4 143 (3) of Act on these undisclosed income of Rs.3,14,979/- and unexplained investment-payment made to Mr. Elias Gerald D Silva of Rs.2,50,000/-. Appeals filed by appellant/firm against said assessment order were dismissed by CIT (Appeals), Mangalore. Being aggrieved, appellant filed appeal before ITAT, Bangalore which was rejected and said order is assailed in this appeal. 3. learned counsel Sri S Parthasarthy appearing for appellant argued that Rs.164158/- was declared in regular return filed by assessee for assessment year 2003-04 as it represented income earned between 1.4.2002 to 12.9.2002. learned counsel placing reliance on Section 158(BA)(3) of Act submitted that if any part of income relates to assessment year for which previous year has not ended or date of filing return of income under Section 139(1) for any previous year has not been expired, and if such income are recorded in books of accounts or 5 other documents, said income shall not be included in block period. learned counsel elaborated his arguments contending that two sets of accounts were maintained by assessee and in one set, this income was recorded and assessee has also filed returns disclosing this income of Rs.164158/- in returns filed for assessment year 2003-04 and as such, Tribunal without appreciating these material facts, has brought this amount of Rs.1,64158/- as undisclosed income falling under block period. 4. next contention urged by learned counsel is as regards payment of Rs.2,50,000/- paid to Sri Elias D Silva for purchasing Kaveri Bar treated to be unexplained investment of assessee-firm. It is submitted that no documents were seized by department to establish that flow of money towards cash payment made to Sri Elias D silva was from appellant-firm. 6 5. Per contra, learned counsel Sri K V Aravind appearing for department contended that subsequent to search conducted on 12.9.2002, amount of Rs.164158/- was disclosed in returns filed for assessment year 2003-04, assessee-firm had not maintained regular books of accounts, said undisclosed income would have gone unnoticed and has come to light only on search conducted by department. Further, it was argued that source of cash payment of Rs.250000/- made to Sri Elias D silva on 1.8.2002 was not properly explained and these are all issues relating to facts which have been considered by tribunal and rightly held to be unexplained investment of assessee-firm. 6. After hearing parties and perusing material on record, we have noticed that as per submissions made by learned counsel for appellant, learned counsel admits that appellant is maintaining two sets of accounts which 7 is not permissible in law merely because subsequent to search held 12.9.2002, assessee has filed returns for assessment year 2003-04 disclosing amount of Rs.1,64,158/- held to be undisclosed income, would not carry any conviction. reliance placed on by learned counsel on Section 158(BA) and Annexure C said to be document maintained by assessee-firm disclosing details of said undisclosed income is not acceptable since said document is very vague, without having details of dates and proof of transaction said to have been effected with parties except parties names and amount. Much emphasis is placed by learned counsel appearing for appellant, on Annexure C, to bring this document under Section 158(BA)(3) of Act which provides that undisclosed income, if recorded on or before date of search or requisition in books of account or other documents maintained in normal course relating to such previous years shall not be included in block period. We are 8 unable to appreciate this argument advanced by learned counsel. No law permits maintenance of two sets of accounts i.e., one unaccounted and other accounted. Such scheme of maintaining two different sets of accounts is totally forbidden in law and no credential value can be given to such illegal accounts maintained by assessee. At no stretch of imagination, this document at Ann: C would be considered as other documents maintained in normal course to exclude from block period. 7. As regards next issue relating to transactions with Kaveri Bar, it is admitted fact that Sri Elias D silva has given statement before departmental authorities on 16.9.2004 wherein it is stated that he had received Rs.2,50,000/- in cash on 18.02.2002. Now case of assessee-firm is that two partners of M/s Kaveri Bar had made payment to Sri Elias D Silva and assessee-firm is no way concerned with said transaction and departmental authorities have wrongly held it to be 9 unexplained investment of assessee which has been affirmed by tribunal without appreciating material on record in proper perspective. tribunal has considered this issue at length and has come to conclusion that partnership deed of Kaveri Bar dated 27.8.2002 was drawn on stamp paper dated 31.3.1999 purchased by assessee-firm and circumstances create doubt regarding genuiness of said partnership deed relied on by assessee. After detailed examination of documents, tribunal has arrived at conclusion that assessee-firm has failed to explain source of amount of Rs.250000/- paid to Sri Elias D Silva. These are pure questions of facts and findings given on these factual aspects cannot be interfered by us in this appeal. 8. Accordingly, Questions of law raised in this appeal are answered against assessee and in favour of revenue. 10 9. For foregoing reasons, appeal is devoid of merits and stands dismissed. Sd/- JUDGE Sd/- JUDGE brn Quality Liquor Agencies v. Assistant Commissioner of Income-tax, Central Circle, Managalore
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