Commissioner Of Income Tax-I, Ludhiana v. M/S Jairath Dyeing & Finishing Mills

ITA No. 294 of 2005 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 294 of 2005 Date of Decision: 15.10.2010 Commissioner of Income Tax-I, Ludhiana Versus M/s Jairath Dyeing & Finishing Mills ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rajesh Katoch, Advocate for the appellant. Ms. Jyoti, Advocate for Mr. S.K. Mukhi, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This order shall dispose of ITA Nos. 294 and 295 of 2005as the same relate to assessment year 1993-94 arising out of the sameorder. In both the appeals, common question of law and facts areinvolved. For brevity, the facts are being extracted from ITA No. 294 of2005. 2.ITA No. 294 of 2005 has been filed by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order dated 5.11.2004 passed by the Income Tax AppellateTribunal, Chandigarh Bench “A”, Chandigarh (hereinafter referred to as“the Tribunal”) in ITA No. 875/Chandi/1998, for the assessment year1993-94 proposing following substantial question of law:- “Whether on law, facts and circumstances of thecase, the Hon'ble Income Tax Appellate Tribunal wasjustified in its interpretation of provision of section 68of the I.T. Act, resulting in deletion of addition ofRs.3,30,000/- made under the said section?” 3.The facts of the case as narrated in the appeal may benoticed. The assessee filed its return on 9.12.1993 declaring anincome of Rs.39,300/-. The assessment was completed at a totalincome of Rs.4,61,819/- after making additions of Rs.3,30,000/- onaccount of unexplained cash credit and Rs.92,519/- on account ofdifference in the accounts of the assessee and M/s Priya Textiles.Against the aforesaid additions, the assessee took the matter in appealbefore the Commissioner of Income Tax (Appeals) [in short “the CIT(A)”]. The CIT (A) vide order dated 18.5.1998 deleted the additionsmade by the Assessing Officer holding that no addition could be madefor the unconfirmed cash receipts for the reasons that the paymentreceived were either for the job work or for the sales made. Against theorder of the CIT (A), the department went in appeal and the Tribunalvide order dated 5.11.2004 dismissed the appeal upholding the view ofthe CIT (A). Hence, the present appeal by the revenue. 4.We have heard learned counsel for the parties. 5.The Tribunal while upholding the aforesaid finding hadrecorded as under:- “We have considered the rival submissions. Wehave also perused the records. We find that in thesecases both the assessees had received payment in cash for the work or for selling of goods to M/s PriyaTextiles. The copies of accounts for the assessmentyear 92-93 and the assessment year 95-96 had beenconfirmed by M/s Priya Textiles. M/s Priya Textiles isdenying the payment of Rs.7,76,000/- received byM/s JI, Ludhiana for the assessment year 93-94.Similarly, M/s Priya Textiles is also denying thepayment of Rs.3,30,000/- to M/s JDFM Ludhiana.The assessing officer is mainly relying on the factthat these payments had not been confirmed by thepayers i.e. M/s Priya Textiles and subsequently Mr.T.R. Bedi, husband of the lady partner had alsodenied the payment to these two assessees. Thereis no dispute regarding the work carried out for M/sP.T. The only dispute relates to the amount due fromM/s PT by these two concerns. It was stated thatthese receipts would not amount to cash creditswhich would be hit by the mischief of section 68. Wefind that confirmed copies of accounts had been filedby the assessee for the period 1.4.93 to 31.3.94 andalso for the period 1.4.95 to 31.3.96 in respect ofboth the assessees. Copies of accounts for theperiod 1.4.93 to 31.3.94 showing the closing balanceas on 31.3.93 of both the assessees were not indispute. The closing and opening balances had alsobeen confirmed by M/s Priya Textiles. The learned AR has also submitted that the cash receipts hadbeen issued in respect of this period not only to thePriya Textiles but to the other parties as well. In thecash receipts produced before the CIT (A) showedthat the other parties had also made the paymentduring this year and there was no interpolation orsubsequent entries being made in these cashreceipts. The learned CIT (A) held that the cashbook and ledger also appears to be written in thenormal course of business. In the case of M/s JIImpounded cash books were also seen by the ld. CIT(A). As regards the signatures on receipts by Mr.Bedi, we agree with the opinion of the learned CIT(A)that receipts for money are signed by the payee andnot by the payer. Learned CIT (A) also found that theassessing officer had written a letter for gettingconfirmation from M/s Priya Textiles regarding theconfirmed copies of accounts, however, theassessing officer could not issue this letter to M/sPriya Textiles. We are also of the opinion that it wasnecessary for the assessing officer to make enquiryfrom M/s Priya Textiles in order to prove that thecash was not received from them. In the absence ofsuch an evidence, the assessing officer was notjustified in making addition in the hands of these twoassessees. Learned CIT (A) also found that in the subsequent years M/s Priya Textiles even doingbusiness with the assessee respondents has neversought to make good the payment which they haddenied making earlier. The department of therevenue has considered the denial of M/s PriyaTextiles as authentic evidence whereas thecircumstantial evidence produced by the assesseehas been ignored. It is quite possible that M/s PriyaTextiles might not have reflected the transaction inthe books of accounts. In that case addition couldhave been made in their hands for payments outsidethe books of accounts. Since the assessing officerhas not verified from M/s Priya Textiles as to how theclosing balance as on 1.4.92 and the openingbalance as on 1.4.93 tally when no payments hadbeen made to the respondents. The CIT(A) in ourview was justified in deleting the additions.Accepting the explanation of one assessee andrejecting that of the other assessee in our opinionwithout sound basis is not justified. Whereas therespondents have produced circumstantial evidenceM/s Priya Textiles have merely denied the payments,therefore, the evidence of the respondents could notbe brushed aside. We, therefore, sustain the orderof the learned CIT (A) for the reasons given therein.”The said finding was not shown to be perverse in any ITA No. 294 of 2005 manner by the learned counsel for the revenue. Learned counsel for therevenue made strenuous efforts for reappreciation of evidence which isnot permissible under Section 260A of the Act. The Tribunal onappreciation of evidence and material on record had concluded that thetransactions with M/s Priya Textiles were genuine. This being a findingof fact does not call for any interference by this Court. 7.Accordingly, the appeals are dismissed. (AJAY KUMAR MITTAL) JUDGE October 15, 2010gbs (ADARSH KUMAR GOEL)JUDGE ITA No. 294 of 2005 -7- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 295 of 2005 Date of Decision: 15.10.2010 Commissioner of Income Tax-I, Ludhiana Versus M/s Jairath International ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rajesh Katoch, Advocate for the appellant. Ms. Jyoti, Advocate for Mr. S.K. Mukhi, Advocate for the respondent. AJAY KUMAR MITTAL, J. This appeal is dismissed. For orders, see ITA No. 294 of 2005 (Commissioner of Income Tax-I, Ludhiana v. M/s Jairath Dyeing & Finishing Mills). (AJAY KUMAR MITTAL) JUDGE October 15, 2010gbs (ADARSH KUMAR GOEL)JUDGE