Commissioner Of Income Tax, Panchkulal v. M/S Rajendra Construction, Panchkula

IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No.242 of 2014Date of decision:10.03.2015 Commissioner of Income Tax, Panchkulal Versus ....Appellant M/s Rajendra Construction, Panchkula ...... Responden CORAM:HON'BLE MR.JUSTICE S.J.VAZIFDAR, ACTING CHIEF JUSTICEHON'BLE MR.JUSTICE G.S.SANDHAWALIA Present:Mr. Yogesh Putney, Advocate, for the appellant Ms.Radhika Suri, Sr.Advocatewith Ms.Rajni Paul, Advocate, for the respondent, ---- S.J.Vazifdar, Acting Chief Justice(Oral): This is an appeal against the order of the Income Tax AppellateTribunal (for short, the 'ITAT") dated 23.08.2013, allowing the appeal of therespondent/assessee, against the order of the Commissioner of Income Tax (forShort, the 'CIT"), under Section 263 of the Income Tax Act, 1961 (for short, the‘Act’). The appeal pertains to the assessment year 2008-09. The assessmentorder is dated 16.08.2010, passed under Section 143(3) of the Act. The CITproceeded under Section 263 of the Act, on the ground that according to him, the Assessing Officer did not examine the following issues: a) fall in G.P. rate; b) purpose of utilizsation of secured loan; c) non verification of issue of collateral securities in absence of anydocumentary evidence; d) non verification of unsecured loan; e) non confirmation from the Sundry creditors; T) non maintenance of stock register; g) non-examination of issue of dis-allowance under Section 40A(3);h) non-examination of business expenses; and1) the issue of penalty qua fresn assessment. Accordingly, the CIT held that the assessment order was erroneousand prejudicial to the interest of the Revenue in as much as the unproved,unsecured loans, sundry creditors, expenses have been accepted and the incomehad been under-assessed to that extent. The assessment order was, therefore,cancelled under Section 263(1) of the Act and the Assessing Officer was directedto reconfirm the assessment afresh, keeping in view the observations of the CIT. The ITAT has considered each of the items in sufficient detail. Atthe outset, we must mention that no question of law arises in this matter. TheITAT has considered the issues, essentially on facts, in coming to the conclusionthat the order of the CIT is not sustainable. It is sufficient to refer to some of theaspects regarding the impugned order passed by the ITAT. The ITAT noted thatthe fall in gross profit was examined by the Assessing Officer. Therespondent/assesses' reply was considered. The volume of work had fallenduring the year. As a result thereof, the profit had also decreased. Further, theprofit had decreased only by less than a quarter percent. Even thereafter, theITAT had come to the conclusion that the insignificant fall in the gross profitcannot lead to the conclusion that the assessment order was erroneous| As far as the loan and security in respect thereof was concerned, theITAT noted that the certificate from the Bank was on record. The Bank statementwas also produced by the respondent before the Assessing Officer and before theCIT. Based on the material produced, the ITAT noted that merely because theremay be excess cash at a particular point of time, it does not follow that therespondent cannot raise a bank loan. In view of the nature of the respondent's business, namely, theconstruction business, the ITAT came to the conclusion, based essentially onfacts that it was possible that the stock register was not maintained. Similarly, asregards the sundry creditors made possible in the current financial year, it wasnoticed that there was opening credit in the balance of the assessee and the copyof the accounts of the assessee was there in the books of M/s Garg Sales and thus,no adverse inference could be taken on the said account. No question of law arises. The impugned order is based essentiallyon facts and the appreciation of the facts. The appeal is, therefore, dismissed, (S.J.Vazifdar)Acting Chief Justice 10.03.20151%'6/1. (G.S.Sandhawalia)Judge