JAINSON Vs. INCOME TAX APPELLATE TRIBUNAL

JUDGEMENT

(1.) These two Tax Appeals involve identical facts as well as same question of law and as such, they are tagged together for hearing and are heard by taking the facts of T.A No.35/2001. Both the matters are pertaining to the assessment year 199798. As per the facts of T.A No.35/2001, a survey was conducted in the premises of the appellant under section 133A of the Income Tax Act, 1961, on 16th October, 1996 and thereafter, the appellant disclosed its stock, cash etc. under Voluntary Disclosure of Income Scheme, 1997 and submitted his disclosure on 26th December, 1997 declaring his income of Rs.9,72,723/, which is undisclosed income, which includes stock, cash as well as amount of sundry debtors. As per the appellant's application, it has disclosed its undisclosed income of the years 199495, 199596 and also of the year 199697. The appellant claims that it has disclosed undisclosed stock, cash and amount of sundry debtors for previous years, which is pertaining not only to the assessment year in which survey was conducted, but also of three previous years to the date of survey, meaning thereby that, survey was conducted on 16th October, 1996, previous year for this survey is the year 199697 and assessment year pertaining to the survey year is 199798. The appellant's contention is that since disclosure was made on 26th December, 1997, whatever has been disclosed by the assessee on 26th December, 1997 was also including the stock, cash and amount of sundry debtors as on 31st March, 1996. The said stock, cash and amount of sundry debtors, which increased because of disclosure, which were available on 31st March, 1996 as closing balance, became the opening balance for 1st April, 1996, and therefore, stock, cash and amount of sundry debtors as on 31st March, 1996, is for the previous year 199596 and is the opening balance of the assessment year 199697.

(2.) Learned counsel for the appellant, Ms. A.R.Choudhary, relied upon a Division Bench judgment of this Court delivered in the case of Sri Gyan Chand Jain Vs. Commissioner of Wealth Tax, Bihar (II), Ranchi (Tax Case No.23/1994 and connected matters) decided on 12th December, 2012 (by us) and submitted that the Division Bench, in the said judgment, after considering the judgment of Supreme Court delivered in the case of Commissioner of Wealth Tax Vs. J.K.Cotton Manufacturers Ltd. & Ors. [(1984) 146 ITR 552 (SC)], held, that after lapse of sufficiently a long period, no presumption can be raised that a secret profit earned sometime during the concerned year has continued to be held by the assessee on the valuation date. Hon'ble Supreme Court held, that once it is held that intangible property of the assessee was in existence on a particular date or period of time, which may have been a secret earned profit, then the said secret earned profit is presumed to continue in the hands of the assessee/such person for a reasonable period of time and thereafter, a presumption can be drawn of extinction of the said property. With the help of the judgment of Sri Gyan Chand Jain, learned counsel for the appellant submitted that in view of the reasons given in the above judgment, it is to be presumed that, once it has been accepted by the Revenue that in the previous years, the appellant had some undisclosed stock, cash and amount of sundry debtors, then unless it is proved by the Revenue that stock, cash and amount of sundry debtors were sold out by the appellant, the presumption is required to be taken that the stock, cash and amount of sundry debtors continued in the hands of the appellant for a reasonable period. Here in this case, the existence of stock, cash and amount of sundry debtors in the hands of the appellant is claimed only for three years from 1994 to 1997 only and there is no enquiry conducted by the Assessing Officer to hold that the appellant had sold the undisclosed stock and spent the cash and amount of sundry debtors and that has been sold by the appellant in any previous year and that is also in short period of three years.

(3.) In addition to the above issue, in T.A No.35/2001, there is one more issue that, in identical facts of the case involved in T.A No.36/2001, the Revenue has already given benefit of reduction of 5% of stock price on account of the damaged goods, which has been denied in T.A No.35/2001. It is submitted that the Assessing Officer has calculated stock value at the time of survey and took the sale price mentioned and did not calculate the stock value considering the reduction in the value of the stock on account of discount on cut pieces and discount due to outdated design or goods which were damaged.