Commissioner Of Income-Tax-Ii,Chandigarh v. Dhani Ram Porp M/S Chauhanbrothered, Scf 20, Sabzi Mandi, Sector 26, Chandigarh

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA.No.844 of 2008 (O&M) Date of decision: 2.7.2009 Commissioner of Income-tax-II,Chandigarh. Vs. ......Appellant Dhani Ram Porp M/s ChauhanBrothered, SCF 20, Sabzi Mandi, Sector 26, Chandigarh. ...Respondent CORAM:-HON'BLE MR.JUSTICE ADARSH KUMAR GOELHON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT:Ms. Urvashi Dhugga, Advocate, Standing Counselfor the Revenue.**** ADARSH KUMAR GOEL, J. (Oral) 1.This appeal has been preferred by the Revenue under Section260A of the Income Tax Act, 1961 (for short, “the Act”) against the order ofthe Income Tax Appellate Tribunal, Chandigarh, Bench-B in ITA No. 1232/Chandi/2004 dated 23.12.2005 for Assessment Year 1999-2000, proposingto raise following substantial questions of law: 1.” Whether in this case the Hon'ble lTAT was legally right in upholding the decision of the learned CIT(Appeals) based on the Hon'ble Gujrat High Courtjudgment in the case of CIT vs. President Industries(2002) 258 ITR 654, when the facts of the present case ITA NO. 844 OF 2008 -2- and case relied upon were altogether different?” 2. “Whether the Hon'ble ITAT was right in ignoring thefact that sales of apples made by the assessee (though oncommission basis) were out of stock lying with him andthe fact that assessee had made investment in purchaseof that stock?” 2.The Assessing Officer asked the assessee to explain whyaddition be not made, on account of unaccounted sales to Shri JagdishChawla Prop. M/s Sai Baba Fruit Co., to the returned income revealedfrom the documents seized during the survey conducted on 6.11.1998 forthe assessment year 1999-2000. The explanation furnished by the assesseewas not accepted by the Assisting Officer and addition of Rs.1,22,604/-. Itwas observed that the assessee had made investment but the same has notbeen explained and accounts were not produced. 60% of the peakinvestment was treated as income. 3On appeal, the Commissioner of Income-tax partly set asidethe addition. It was also held that instead of taking 60 peak investment asincome, the amount of the profits assessed on the basis of commission atthe rate of 5% of the total sale should be added. The Tribunal upheld thesaid view. The conclusion of the Tribunal is as under: “ Thus, it is evident from the claim of the AOhimself that the documents seized in the course ofsurvey reveled that assessee had sold apples oncommission basis to M/s Sai Baba Fruit Co. It is, ITA NO. 844 OF 2008 -3- therefore, not reasonable for the revenue to treatthe supply of apples on outright sale against theevidence found in the course of survey. Since thedocuments seized in the course of survey revealedthat assessee had supplied apples to M/s Sai BabaFruit Co. on commission basis, it is reasonable toassess the commission income in respect of theundisclosed turnover of Rs.6,23,550/-. This is inaddition to the income disclosed by the assessee ofRs.64,200/-. The only issue that survives for ourconsideration is whether the CIT (A) was justifiedto assess the commission @ 5% only. In the caseof Shri Sanjay Chhabra, Prop.M/s Sanjay ChhabraTraders (Supra), the ITAT, Chandigarh Bench hasaccepted the commission of 5% on fruit supply asreasonable.” 4.We have heard learned counsel for the revenue. 5.It is submitted that investment itself should have been treatedas income and not the commission. The judgment of Gujrat High Court inCIT vs. President Industries (2002) 258 ITR 654 relied upon by theTribunal was distinguishable. The fact remains that CIT (A) on facts hasheld that investment could not be treated as income and income will only bethe commission earned from sale. 6.In our view, the finding of the CIT (A) is finding on fact. ITA NO. 844 OF 2008 -4- 4.We have heard learned counsel for the revenue. 5.It is submitted that investment itself should have been treatedas income and not the commission. The judgment of Gujrat High Court inCIT vs. President Industries (2002) 258 ITR 654 relied upon by theTribunal was distinguishable. The fact remains that CIT (A) on facts hasheld that investment could not be treated as income and income will only bethe commission earned from sale. 6.In our view, the finding of the CIT (A) is finding on fact. ITA NO. 844 OF 2008 -4- Assessment the income from the documents which were found duringsurvey cannot be subject matter of any rigid principle. Assessment has tobe made on facts of each case. The findings of the CIT (A) and theTribunal are, thus, findings on fact. 7.No substantial question of law arises. 8.The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE July 02, 2009raghav (DAYA CHAUDHARY) JUDGE Note: Whether this case is to be referred to the Reporter ........Yes/No ITA NO. 844 OF 2008 -5- ITA NO. 844 OF 2008 -6-