TMI Blog2009 (12) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... current year as well as brought forward. 6*. The appellant craves to leave add/alter or amend the grounds herein above taken. * incorrectly numbered, therebeing no ground no. 5. 2. At the outset, ld. A.R. on behalf of the assessee did not press ground No.1 in the appeal, accordingly this ground is dismissed. 3. Ground no.2 relates to disallowance of ₹ 1,41,716/- on account of belated employees' contribution towards PF. Facts , in brief, as per relevant orders are that return declaring nil income under the normal provisions and book profit of ₹ 3,64,494/- u/s 115JB of the Income-tax Act, 1961 (hereinafter referred to as the Act ) Act, filed on 27.11.2003 by the assessee, manufacturing pipe fittings, after being processed on 18.3.2004 u/s 143(1) of the Act was taken up for scrutiny with the issue of notice u/s 143(2) of the Act on 27.7.2004. During the course of assessment proceedings, the Assessing Officer[AO in short] noticed that the assessee did not deposit employer and employees' contribution towards PF for the months of April, May, July, September to November, 2002 and February, March 2003 within the time stipulated under the relevant enactme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee within the due date of filing of return u/s 139(1) of the Act for the assessment year under consideration, there is no ground for disallowing the same. Therefore, ground no.2 in the appeal is allowed. 7. Next ground nos. 3 and 4 relate to assessment of income of ₹ 14,35,000/- surrendered by the assessee during the course of survey under the head Income from other sources and the claim for set off of depreciation for the current year and earlier year against the said income. The Assessing Officer noticed that in this case a survey u/s 133A of the Act was conducted on 18.2.2003 in the premises of the assessee. During the survey, on physical verification of stock comprising raw- material, semi finished goods, finished goods, work-in-progress and consumable and non-consumable items vis- -vis stock as per books, the AO noted the difference of 31751 kgs.. In his statement u/s 131 of the Act, Shri Shantilal D. Mehta, Managing Director of the company replied to question nos. 5 and 6 as under: .5. As per the physical verification of the stock taken during survey action u/s.133A at the office cum factory premises of your company with the help of employees of the com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return, the assessee did not offer the aforesaid unaccounted stock of ₹ 14,35,000/-. To a query by the AO, the assessee explained that stock as on the date of survey was worked out on estimated basis and the extra turnover in the last phase of the accounting year represented the sale of excess stock found at the time of survey. Accordingly, while pointing out that percentage of consumption of material to sales was 43.28% for the period 1.4.2002 to 18.2.2003 and 48.92% for the period 19.2.2003 to 31.3.2003 and 44.51% over the period 1..2002 to 31.3.2003, the assessee submitted that the excess stock at the time of survey was sold in the subsequent part of the accounting year. Since the entire turnover had been offered for tax, the excess stock had been converted in to income and offered for taxation, the assessee argued. It was further pointed out that the addition of ₹ 14,35,000/- was agreed to buy mental peace. Moreover, the complete quantitative tally of stock with the excise record for the year under consideration, reflected that accounts were correct, the assessee pleaded. However, the Assessing Officer did not accept these contentions of the assessee on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the stock of goods is an accumulation of the goods purchased on different dates. Some of these purchased goods are sold out. What remains is termed as stock. The goods are purchased and the relevant expenditure is booked to the trading /manufacturing account. In other words, the value of the goods that had been purchased / manufactured but had not been sold on any particular date is represented in the value of the goods in stock. Therefore, when the Assessing Officer speaks about the value of this unaccounted stock, what is being discussed is the expenditure gone into the purchase / manufacturing of the goods which has not been explained. Put simply, it represents unexplained expenditure. It is not the appellant's case that such unexplained purchases then lying with the appellant in the form of unsold goods / stock had been accounted for. What the appellant is trying to explain is that the income arising from the sale of such purchases / stock after the date of survey and upto the last day of the accounting year gets included in the total turnover of the year. In other words, the income component stands included in the total income declared at the end of the accounting yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the set off of brought forward losses and depreciation and the current depreciation is also confirmed in view of the Hon'ble Gujarat High Court decision relied upon by the Assessing Officer. 9. The assessee is now in appeal before us against the aforesaid findings of the ld. CIT(A). The ld. AR on behalf of the assessee while relying on the decision of the Hon'ble jurisdictional High Court in the case of Krishna Textiles v. CIT, 310 ITR 227 (Guj.) contended that in the scheme of the Act, income has to be assessed under any of the six heads mentioned in the Act. There can be no headless income, the ld. AR argued. Even if the income is to be assessed under the head other sources , depreciation for the current year and unabsorbed depreciation for the preceding year has to be set off under the provisions of sec. 71(1) of the Act. In this connection, the ld. AR relied on the decision dated 20.2.2009 of the ITAT in the case of ACIT v. Babulal S. Sharma in ITA No.2462/Ahd./2006 for the Assessment Year 2003-04. Accordingly, the ld. A.R. contended that depreciation has to be set off against the income assessed by the Assessing Officer under the head other sources . To a query ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cases where the nature and source of investments made by the assessee or the nature and source of acquisition of money, bullion etc. owned by the assessee or the source of expenditure incurred by the assessee are not explained at all or not satisfactorily explained, then the value of such investments and money, or value of articles not recorded in the books of account or the unexplained expenditure may be deemed to be the income of the assessee. It follows that the moment a satisfactory explanation is given about such nature and source by the assessee, then the source would stand disclosed and will therefore be known and the income would be treated under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all on the basis of which the income can be classified under one of the heads of income under section 14, it would not be possible to classify such deemed income under any of these heads including 'Income from other sources' which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under section 14, it follows t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be reliable and the assessee had not sent the above drafts. The Assessing Officer was not satisfied with the explanation furnished by the assessee and he made the impugned addition of ₹ 1,92,161. In the light of these facts, Hon'ble High Court observed that since there is an admitted position that the assessee was carrying on the business of coal and lignite and purchases were made from time to time from GMDC, in that case, even if any addition is required to be made under section 69C, the entire expenditure towards it has to be allowed as a deduction under section 37(1) of the Act. The assessment year under consideration is admittedly 1987-88 to which the effect of this amendment will not be applicable. Apparently, such are not the facts in the case under consideration. 10.3 As regards decision of the ITAT ,relying upon the decision of the Hon'ble Supreme Court in ITO Vs. Sandhu Brothers(Chembur), 273 ITR 1(SC), with due respect, we are of the opinion that the observations of the Hon'ble Supreme Court in the said decision were in relation to a different context ,not relevant to the facts of the case under consideration. In the said decision, the primary que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enough because even a single significant detail may alter the entire aspect, in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive. Precedent should be followed only so far as it marks the path of justice, but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it. 10.5 In the light of aforesaid observations of the Hon'ble Apex Court, we are of the opinion that the reliance by the assessee on the decisions in the case of Krishna Textiles(supra) and of the ITAT, relying upon the decision of the Hon'ble Supreme Court in the case of Sandhu Brothers(Chembur) is totally misplaced. 10.6. In view of the foregoing and especially in view of the aforesaid decision of the Hon'ble jurisdictional High Court in Fakir Mohammed Haji Hassan(supra), we uphold the findings of the ld. CIT(A) in confirming the add ..... X X X X Extracts X X X X X X X X Extracts X X X X
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