1 HIGH COURT OF MADHYA PRADESH BENCH AT GWALIOR I.T.A. No.39/2013 (Income Tax) M/s Bhatnagar Opticals vs. Income Tax Officer, Gwalior Shri K.N. Gupta Senior Advocate with R.S. Dhakad, Advocate for appellant. Shri D.P.S. Bhadoriya with Shri Santosh Jain and Shri Anvesh Donderiya, learned counsel for respondent. CORAM: Hon'ble Shri Justice Sanjay Yadav Hon'ble Shri Justice S.K. Awasthi Reserved on : 28.08.2017 Date of Decision : 14.09.2017 ORDER Per Sanjay Yadav, J Present Appeal under Section 260A of Income Tax Act, 1961 is directed against order dated 2 22.3.2013 passed by Income Tax Appellate Tribunal Agra, Bench Agra in I.T.A. No.488/Agra/2013 in relation to assessment year 2009-2010. 2. relevant facts briefly are that in survey carried out in assessee's premises under Section 133A of Income Tax Act, 1961 (hereinafter to be referred to as Act of 1961 ), it was found that assessee firm did not maintain any books of accounts of business, stock register, list of stock was not prepared. Cash of Rs.1,650/- was found. Stock found in premises was valued at Rs.7,23,819/-. Machinery use for business of sale of spectacles and contact lens and air conditioner was also valued. Statement of Shri Anurag Bhatnagar proprietor of assessee firm and Shri Kailash Chandra Jain, Accountant of firm was recorded. closing balance was shown on date of survey at Rs.10,35,685/- and as shortage of cash was not explained addition of Rs.10,34,035/- (1035685- 1650) was made on account of unverified cash. Case was short listed for scrutiny. Return was filed on 3 9.11.2011 disclosing loss of Rs.5,19,316/-. Assessment Officer, did not accept return being filed beyond period prescribed under Section 139(1) of Act of 1961. assessee in response to notice retracted his statement of 17.4.2009 which was rejected by Assessing Officer. For assessment year 2009- 10 Assessee had disclosed GP rate of 1.24 percent whereas in preceding years 2007-08 and 2008-09 he had disclosed GP rate of 17.75 percent and 17.59 percent respectively. Assessing Officer applying multiplier of 5 against disclosed sales of assessee estimated sales at Rs.60,98,900/- and by applying profit rate of 17.72% made addition of Rs.10,60,725/-. As belated return was not accepted loss declared therein was taken to be nil. 3. assessment order dated 29.12.2011 was challenged in Appeal under Section 143(3) of Act of 1961. Appeal was partly allowed on 06.07.2012. Commissioner Appeals deleted addition of Rs.10,34,035/- on account of unexplained cash to be 4 not sustainable. GP (Gross Profit) was held to be Rs.3,40,000/- instead of Rs.10,80,725/-. Commissioner Appeals, however, upheld disallowing credit claimed towards loss. 4. That against order in Appeals, Revenue as well as to Assessee preferred Appeal before Income Tax Appellate Authority, Agra. Both these appeals were dismissed on 22.3.2013. Whereagainst assessee has preferred this Appeal on following proposed substantial question of law: (i) That there is no provision in Chapter VI of Act of 1961 that if return to be filed under Section 139 (1) is not filed by due date then loss shown for current year in return of income shall not be allowed in same year. (ii) That assessee can retract statement recorded at time of search even at appellate stage that income declared by him did not belong to him but to certain other entities. (iii) That delay having been condoned upto 30.6.2011 further delay of four months could have been condoned. (iv) That findings are perverse. Though few more questions are proposed; 5 however they were not pressed. 5. Sub-Section (1) of Section 139 of Act of 1961 envisages that every person - (a) being company or firm; or (b) being person other than company or firm, if his total income or total income of any other person in respect of which he is assessable under this Act during previous year exceeded maximum amount which is not chargeable to income-tax, shall, on or before due date, furnish return of his income or income of such other person during previous year, in prescribed form and verified in prescribed manner and setting forth such other particulars as may be prescribed. 6. Sub section (4) of Section 139 of Act of 1961 stipulates that: (4) Any person who has not furnished return within time allowed to him under sub-section (1), or within time allowed under notice issued under sub-section (1) of section 142, may furnish return for any previous year at any time before expiry of 6 one year from end of relevant assessment year or before completion of assessment, whichever is earlier: Provided that where return relates to previous year relevant to assessment year commencing on 1st day of April, 1988, or any earlier assessment year, reference to one year aforesaid shall be construed as reference to two years from end of relevant assessment year. 7. In case at hand, Commissioner Appeal found: 2.2 ... Survey operation u/s 133A has been carried out at business premises of appellant firm on 18.12.2008. Accordingly, appellant's case is required to be compulsorily scrutinized for assessment year under consideration. appellant is required to file its return on or before 31.7.2009 as per provisions of Sec.139(1) of I.T.Act. Since no such return has been filed, AO has issued notice under Section 142(1) on 22.09.2010 requiring appellant to file its return on or before 29.09.2010. Vide letter dated 29.09.2010, appellant has requested for further time on ground of non-availability of his CA/AR on 29.09.2010. In meantime, vide letter dated 12.12.2008, appellant has requested AO to supply photocopy of impounded document since they relate to its routine business and it is facing difficulty to provide service to its consumers in their absence. Nowhere this letter mentions that its return cannot be filed in their absence. It is only vide letter dated 28.04.2011 that appellant 7 has informed AO of its inability to file its return in absence of photocopy of impounded documents. In response, AO has informed appellant, vide letter dated 10.06.2011 to take required photocopies on or before 15.06.2011 either personally or through its AR and file return within 15 days therefrom. As per records, appellant has taken/received desired photocopies on 16.06.2011 as per acknowledgment made on letter dated 22.12.2008. Thereafter vide notice dated 24.06.2011 issued under Section 142(1), appellant has been asked to produce copy of return filed with enclosures alongwith reply to questionnaire issued earlier on 19.04.2011. date fixed for compliance is 15.07.2011. In response, neither has anyone attended nor any reply made. Required return has also not been filed till 09.11.2011 for reasons best known to appellant. 2.3 From above it is clear that AO himself has condoned delay in filing of return but only till 30.06.2011 as mentioned in his letter dated 10.06.2011. No request for further condonation has been made by appellant nor granted by AO. Thus, AO is found justified in treating return filed on 09.11.2011, much beyond prescribed as well as allowed time as belated return and not giving credit for loss claimed by appellant. 8. These findings are based on cogent material evidence. If assessee had not sought condonation for 8 period from 30.6.2011 to 9.11.2011, he has to blame himself, which does not give rise to any substantial question of law, being pure question of fact. 9. As to retracting of statement Commissioner Appeal on basis of evidence on record found: 3.2. Appellant's submissions alongwith assessment order thus have been considered. Assessment records, statement of partner(s) alongwith survey folder have also been perused. During course of survey operations on 18.12.2008, physical stock valuation has been done at Rs.7,24,000/- at various sections of business premises, as per inventory list. While preparing same, one of partner viz. Sh.Anurag Bhatnagar, present at premises, categorically mentioned and signed at various places as under:- ^^mijksDr LVkWd dk ewY;kadu esjs }kjk crk;s x;s njksa ds vk/kkj ij fd;k x;k gS^^ 3.3 Statement of firm's accountant Sh.Kailash Chand Jain, who has also been cross-examined by partner, categorically and vehemently mentions fact of non-maintainance of regular books of accounts by assessee firm 9 during year (upto date of survey) or any of earlier years. In fact, as per records even return filed by appellant firm for earlier year (A.Y.2006-07) also do not contain Trading, Profit and Loss account nor appellant has produced them before AO despite there being statutory notices/summons issued to it in this regard. As per his statement recorded during course of survey, partner has earlier mentioned that cash book, ledger, sale/purchase bills are maintained and books of accounts are kept with accountant Shri Kailash Chand though no stock register is maintained (Qn./Ans.No.6,7,14). When confronted with accountant's statement regarding non-maintenance of books, partner has submitted as under :- iz-19 Jh dSyk'kpan tSu] equhe] dk c;ku fy;k x;k ftlesa mUgksaus crk;k fd muds ikl vkidh dksbZ Hkh fdrkcsa] fcYl] okmplZ vkfn ugha gSaA tcfd vkius vius c;ku ds iz'u ua-6 ds mRrj esa dgk gS fd QeZ ds O;olk; ls lEcfU/kr ys[kk iqLrdsa vdkmUVsUV Jh dSyk'kpan tSu ds ikl jgrh gSaA d`i;k crk;sa fd vkius ;g >wBk c;ku fdl dkj.k ls fn;k \ m- eq>s ftruh tkudkjh Fkh] og eSaus crk nh FkhA iz-20 d`i;k crk;sa fd bl lEcU/k esa mUgksaus >wBk c;ku fn;k gS ;k vki >wBk c;ku ns jgs gSa \ m- eSus tks c;ku esa dgk Fkk og xyr FkkA esjs HkkbZ dks bl lEcU/k esa tkudkjh gksxhA 10 iz-21 vki vius HkkbZ ls iwNdj crk,sa fd fdrkcsa rFkk [kjhnh&fc h] okmplZ dgkW ,oa fdlds ikl gSa \ m- lp rks ;g gS fd gekjh QeZ ls lEcfU/kr dksbZ Hkh ys[kk iqLrdsa ugha j[kh tkrh gSaA iz- 22 fiNys ikWp o"kZ ds [kjhnh ,oa fc h ds fcYl ,oa okmplZ dgkW ij gSa \ m- miyC/k ugha gSA iz- 23 d`i;k crk;sa fd fiNys ikWp o"kZ ds [kjhnh ,oa fc h ds fcYl ,oa okmplZ dgkW ij miyC/k ugha gSa \ m- [kjhnh ,oa fc h ds fcYl gekjs ikl ugha gSA^^ Accordingly, voluntary disclosure/surrender of stock of Rs.7,24,000/- has been made by partner as under :- iz- D;k vki dqN dguk pkgrs gSa \ m- ugha vHkh eSa dqN Hkh dgus dh fLFkfr esa ugha gwWA dy vius HkkbZ ls ppkZ djus ds mijkar cryk xkA mijksDr c;ku lksp&le>dj iw.kZ gks'kksgokl esa fcuk fdlh ncko ds fn;kA c;ku dks i<+dj] lksp le>k ,oa bls lR; ikdj vius gLrk{kj fd,A^^ 3.4 Thereafter, same partner viz. Sh.Anurag Bhatnagar has appeared before AO on 19.12.08 alongwith his AR and submitted Power of Attorney in his favour. Thus, appellant's contention that statement has been given under coercion is not borne out from records. Retraction has been done after gap of about 4 months from date of survey vide letter dated 17.04.2009 sent by dak. appellant has not given any documentary evidence whatsoever at any stage of 11 proceedings either assessment or appeal-in support of valuation of closing stock declared by it in its return at Rs.12,19,780/- (as on 31.03.2009) and at Rs.15,09,217/- (as on 18.12.2008 i.e. date of survey). No bills/details of any kind been submitted in support of its submissions that during course of inventory valuation of date of survey, certain items were left out. In fact, nowhere appellant has challenged physical valuation at his specified rates, not even in his retracted letter dated 17.04.2009 nor this plea taken. appellant is found to be in possession of stock as per physical inventory made, for which no explanation with documentary evidence been given and addition is found to have been made not merely on basis of statement alone of one of authorized partners of firm. 3.5 On basis of above and keeping in view fact that no books of accounts found either from premises or from accountant nor produced till 14.12.2011 i.e. at fag end of period for completion of assessment proceedings, addition of Rs.7,24,000/- is hereby, confirmed. 12 10. When these findings are tested on anvil of facts on record, same are not found to be perverse as would give rise to question of law to be entertained in appeal under Section 260A of 1961 Act. 11. Having thus considered, we do not find any substantial question of law which arises for consideration in present Appeal. 12. Consequently, Appeal fails and is dismissed. (SANJAY YADAV) (S.K.AWASTHI) JUDGE JUDGE Bhatnagar Opticals v. Income-tax Officer, Gwalior