N.R.S. Ganesan (JM)

1. This appeal of the taxpayer is directed against the order u/s 263 passed by the Administrative Commissioner dated 29-03-2011 for the assessment year 2006-07. Shri R. Krishna Iyer, the ld. representative for the taxpayer submitted that the taxpayer has filed the return of income on 31-10-2006 and the revised return was filed on 04-12-2007. In the original return of income, the taxpayer has offered Rs. 10,09,060 as income for taxation. In the revised return, the taxpayer has offered additional income of Rs. 2,58,000. According to the ld. representative, the assessing officer made a lump sum addition of Rs. 6 lakhs on sale of liquor. According to the ld. representative, the assessing officer has fixed the income at Rs. 13,51,060. Referring to the income determined for the earlier assessment year, the ld. representative submitted that the income estimated by the assessing officer for the year under consideration is very reasonable. However, the Administrative Commissioner found that the additional income offered in the revised return to the extent of Rs. 2,58,000 is about 140% of the cost of goods. Since there was a difference of Rs. 9,54,880 between the estimated sales and the actual sales in the revised return, the difference shall be treated as income. According to the ld. representative, since the assessing officer has reasonably estimated the lump addition of Rs. 6 lakhs on the basis of the revised return, it cannot be said that the action of the assessing officer is erroneous and prejudicial to the interest of the revenue. The assessing officer computed the income on one method and the Commissioner of Income-tax(A) has computed the income on the other method. Therefore, it cannot be said that the order of the assessing officer is erroneous and prejudicial to the interest of the revenue.

2. On the contrary, Smt. S. Vijayaprabha, the ld. DR submitted that in the revised return, the taxpayer disclosed the sale value at Rs. 2,40,86,849 whereas in the original return it was at Rs. 2,31,31,969. The income as per the original return was Rs. 6,96,880. The difference between the turnover to the extent of Rs. 9,54,880 was not taken as income by the assessing officer. According to the ld. DR, when the sale value of the goods was declared at Rs. 2,40,86,849 instead of Rs. 2,31,31,969 the difference of Rs. 9,54,880 has to be taken as income. This was not done by the assessing officer. Therefore, the Administrative Commissioner found that there was an error in the order of the assessing officer which is prejudicial to the interest of the revenue. Accordingly the assessing officer was directed to redo the assessment.

3. We have considered the rival submissions on either side and also perused the material available on record. Admittedly, the taxpayer has filed a revised return disclosing the sales turnover at Rs. 2,40,86,869. Sales as per the books of account was Rs. 2,31,31,969. Therefore, an amount of Rs. 9,54,880 was disclosed as sales outside the books of account. It is not known whether the corresponding purchases were also effected outside the books of account. If the corresponding purchases were also made outside the books of account, then what is to be added is only the profit element embedded in such sales. If there was no corresponding purchase and the goods originally purchased was sold at a higher cost of Rs. 2,40,86,849, then the difference of Rs. 9,54,880 has to be treated as income. These facts need to be verified. Therefore, this Tribunal is of the considered opinion that the Administrative Commissioner has rightly exercised his jurisdiction and directed the assessing officer to redo the assessment. This Tribunal do not find any infirmity in the order of the lower authority. Accordingly, the order of the Administrative Commissioner is confirmed. In the result, the appeal of the taxpayer stands dismissed.

Order pronounced in the open court on this 07th day of December, 2012.