Appella v. Commissioner Of Income Tax, Jalandhar & Another

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH ITA No.268 OF 2012DATE OF DECISION : 10thMARCH, 2014. M/s. Chaudhary Enterprises, Bhadi Road, Balachur, Jalandhar ..-. Appella Versus Commissioner of Income Tax, Jalandhar & another .--e Responden CORAM: HON’BLE MR. JUSTICE HEMANT GUPTA! HON BLE MR. JUSTICE SURINDER GUPTA 7 OS OE Present :Mr. Akshay Bhan, Senior Advocate withMr. Alok Mittal, Advocate for the petitioner. Mr. Vivek Sethi, Advocate for the respondents, 7 EAS HEMANT GUPTA, J. (ORAL) The appellant has filed present appeal under Section 260 A ofthe Income Tax Act, 1961 (for short ‘the Act’) against the order dated29.05.2012 passed by the Income Tax Appellate Tribunal, Amritsar Bench,Amritsar (for short the Tribunal) in ITA No.189(ASR) of 2010(Assessment year 2001-02). The assessee has claimed the followingsubstantial questions of law in the present appeal; (1) Whether in facts and circumstances of the present case, thaction of the Ld. Authorities below in wrongly construing theaction of the Ld. Authorities below in wrongly construing the offer to surrender as an admission and the inability on the part ofthe appellant/assessee to produce evidence and _ therefoconfirming the addition of Rs.11,67, 655/- being the salesoutside the books of account and 5% of profit on the saidpurchases is legally unsustainable the eyes of law? (1i)Whether in facts and circumstances of the case, the assesseeacting under the bonafide belief after making the offer tosurrender was prevented by sufficient cause from producing theevidence and therefore the action of the ld. authorities below indenying the assessee from leading evidence under Rule 46A ofthe Income Tax Rules, 1962 is legally unsustainable in the eyesof law?acting under the bonafide belief after making the offer tosurrender was prevented by sufficient cause from producing theevidence and therefore the action of the ld. authorities below indenying the assessee from leading evidence under Rule 46A ofthe Income Tax Rules, 1962 is legally unsustainable in the eyesof law? (111) Whether in facts and circumstances of the case, the action of thId. Courts below in not appreciating the additional evidence inorder to prove the free accessories given as incentive to thepurchasers at the time of the sale of the tractors is legallyunsustainable in the eyes of law?Id. Courts below in not appreciating the additional evidence inorder to prove the free accessories given as incentive to thepurchasers at the time of the sale of the tractors is legallyunsustainable in the eyes of law? (iv)Whether in fact and circumstances of the case, the action of theauthorities below, the impugned orders are legally sustainable inthe eyes of law?authorities below, the impugned orders are legally sustainable inthe eyes of law? Assessee is engaged in the sale of tractors and parts thereof,The assessee filed its return of income oftL1,62,910/- on 31.10.2011,During the process of scrutiny of the the return of the assessee, it wasfound that no sale of spare parts of the tractors was shown to be madethough the stock reflected such spares amounting to=11,12,052/-. Theassessee submitted in writing that such tractor parts were supplied free ofcost in line with the custom in the trade to supply spares to promote sale oftractors. It was also mentioned that delivery of such spares (farmer kits)were not mentioned on the sales bills to avoid legal complications. TheAssessing Officer considered net profit at the rate of 5% and made -3j- addition accordingly on the amount of =11,12,052/- on the failure of theassessee to produce any documents regarding giving of such spare parts tothe purchasers. The appeal against the said order was dismissed by theCommissioner of Income Tax (Appeals). | -3j- addition accordingly on the amount of =11,12,052/- on the failure of theassessee to produce any documents regarding giving of such spare parts tothe purchasers. The appeal against the said order was dismissed by theCommissioner of Income Tax (Appeals). | However, in further appeal, the Tribunal remitted back to theCommissioner of Income Tax (Appeals) to allow a reasonable opportunityto both the parties to take into consideration the purchase and sales of thespares. Thereafter, the Commissioner of Income Tax (Appeals) consideredthe additional evidence sought to be produced by the appellant andreturned the following finding: “3I do not accept the appellant’s application foradmission of fresh evidence at this stage of appellateproceedings. Firstly, this issue was very much before theassessee during the assessment proceedings. The AO hadasked the assessee to lead evidence that the farmer kits andSpare parts had been given free of cost to the purchasers.Before the AO, the counsel of the assessee stated that it wasnot possible to give details of persons to whom suchincentives were given. The assessee could not lead anyevidence to prove the explanation furnished. It was onlybecause the assessee was not able to lead evidence duringthe assessment proceedings that the assessee offered to makean addition @ 5% in respect of these items. Under theprovision of Rule 46A(1) of I.T. Rules, 1962, unless theassessee is able to show reasonable and sufficient cause as towhy he did not submit the documents sought to be admittedas fresh evidence before the AO, only then can the freshevidence be allowed to be admitted. The appellant had triedto contend that he was persuaded to make offer of surrender.There is nothing in the assessment record which suggests that the assessee tried to lead evidence of delivery of theSpare parts etc. free of cost which was not accepted by theAO. On the other hand, there is evidence to show that theassessee was aSked to give evidence that these items weregiven free of cost but the assessee was not able to lead anyevidence in respect of the same. The order sheet nothingdated 28.01.2003 in the assessment record shows that theAO asked the assessee to produce the stock register oftractors and explain the sale of farmer kits and spare parts.The offer of 5% income in respect of these items was madeby the Id. counsel for the assessee only on 04.11.2003 1.e.after almost 9 months. In this period, the assessee was notable to produce any evidence that these spare parts/kits hadbeen given free of cost to the purchasers. I am, therefore,satisfied that the conditions prescribed in Rule 46A of I.T.Rules for allowing admission of additional evidence are notsatisfied in respect of the documents sought to be admitted atthis stage.” In view of the said finding, the Commissioner of Income Tax(Appeals) affirmed the order of the Assessing Officer applying net profitof 5%. Such order has been affirmed in further appeal by the Tribunal. Learned counsel for the appellant has argued that theappellant has lead sufficient evidence to prove that the tractor’s parts weregiven to the purchasers of the tractors, as a farmers kit without any chargesand therefore, the same could not be added to the income of the appellant.It is also argued that the appellant has produced the challans, bills and alsothe affidavit of some of the purchasers to support that the gifts were givento the farmers at the time of purchase of the tractors in view the trade practices, therefore, the same could not have been added as income of theappellant. We find that the entire evidence has been taken intoconsideration by the Commissioner of Income Tax (Appeals). The CIT(Appeals) has not accepted the plea raised by the appellant. Since findingreturned is based on the facts which were before the Commissioner ofIncome Tax (Appeals) we do not find that such finding of fact raises anysubstantial question of law for consideration of this Court. Consequently the present appeal is dismissed, (HEMANT GUPTA)JUDGE 10[th]March, 2014‘raj /Vimal practices, therefore, the same could not have been added as income of theappellant. We find that the entire evidence has been taken intoconsideration by the Commissioner of Income Tax (Appeals). The CIT(Appeals) has not accepted the plea raised by the appellant. Since findingreturned is based on the facts which were before the Commissioner ofIncome Tax (Appeals) we do not find that such finding of fact raises anysubstantial question of law for consideration of this Court. Consequently the present appeal is dismissed, (HEMANT GUPTA)JUDGE 10[th]March, 2014‘raj /Vimal (SURINDER GUPTA)JUDGE