Commissioner Of Income Tax-Iii, Ludhiana v. M/S. R.b. Knit Exports

ITA No. 308 of 2014 (O & M)Date of Decision:- 30.04.2015 Commissioner of Income Tax-III, Ludhiana ......Appellant(s) vs. M/s. R.B. Knit Exports ......Respondent(s) CORAM:- HON'BLE MR. JUSTICE S.J. VAZIFDAR,ACTING CHIEF JUSTICE HON'BLE MR. JUSTICE G.S.SANDHAWALIA Present:-Mr. Rajesh Katoch, Advocate,for the petitioner. Ms. Rinku Dhaiya, Advocate,for the respondent. S.J. VAZIFDAR, A.C.J. (Oral) This is an appeal against the order of the Tribunal dismissingthe appellant's appeal against the order of the CIT (Appeals) to a substantialextent. The Assessing Officer (in short 'AO') had made a disallowance tothe extent of `2,17,25,124/- out of the fabrication charges claimed by therespondent-assessee on the ground that the genuineness of the expenditurewas not proved. The assessee had made payments under `20,000/- to variousfabricators/job workers aggregating to about `4.34 crores. The AO directedthe Inspector to investigate the genuineness and identity of the fabricators.The Inspector submitted his report which inter alia stated that many of thefabricators were not found at the residential address furnished by therespondent. In some cases, the house number was not existing. The AO disallowed the expenses to the extent of `2.17 crores. The CIT (Appeals) dealt with the matter including theInspector's report in considerable detail. The Tribunal, by the impugnedorder, has accepted the findings of the CIT. As rightly submitted by Ms.Rinku Dhaiya, the matter is essentially a question of fact and does not raisea substantial question of law. We are unable to state that the findings of theCIT and the Tribunal are perverse or absurd. It is sufficient to refer to onlya few aspects regarding the 37 persons in respect of whom the Inspector hadmade enquiries. The name of one person has been repeated. 17 of these 37people had subsequently been traced. It was found that two of them hadexpired. In certain cases, the Inspector had gone to the wrong address. Asnoted by the Tribunal, the Inspector carried out the entire exercise in oneworking day itself. The Tribunal has, therefore, found it difficult to placereliance on the report. It is difficult to imagine the inspection in respect of37 fabricators having been carried out satisfactorily within one day. In anyevent, this is a matter of balance of probabilities involving questions of fact. In the circumstances, Ms. Rinku Dhaiya's submission on behalfof the respondent that the matter involves essentially questions of fact anddoes not raise a substantial question of law is well founded. Accordingly,the CIT (Appeals) and the the Tribunal having sustained the disallowance tothe extent of only `15 lacs cannot be said to be absurd or perverse. The appeal is, therefore, dismissed. (S.J. VAZIFDAR) ACTING CHIEF JUSTICE (G.S. SANDHAWALIA) JUDGE