Commissioner Of Income Tax v. Pravinchandra B. Patel

O/TAXAP/1881/2005 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1881 of 2005 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ?the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ?judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ?to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ COMMISSIONER OF INCOME TAX....Appellant(s) Versus PRAVINCHANDRA B. PATEL C/O NARESHBHAI CHIMANLAL SHAH....Opponent(s) ================================================================ Appearance: MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1RULE UNSERVED for the Opponent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERIandHONOURABLE MR.JUSTICE K.J.THAKER Date : 17/10/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1)This Tax Appeal u/s.260A of the Income-Tax Act, 1961 is filed against the judgment and order dated 17.3.2005 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench ‘SMS’ in ITA No.3243/Ahd/2004 where by the appeal filed by the revenue was dismissed. 2)The facts in brief are that the assessee had filed its return for the assessment year 1996-97 showing total income of Rs.57,694/-. Initially, the return was processed under section 143(A) of the Income Tax Act, 1961. The Assessing Officer vide his order dated 17.3.2005 made addition of Rs.2,15,107/-. 3)Against this addition, the assessee filed an appeal before the CIT(A). The CIT(A), vide his order dated 10.9.2004, partly allowed the said appeal and directed to work out the fresh computation of profit after reducing purchase price by 25%. 4)Being aggrieved by the same, the revenue had filed an appeal before the Income Tax Appellate Tribunal. The Tribunal, after hearing the parties, dismissed the appeal of the revenue. Hence, this appeal at the instance of the revenue. 5)While admitting the appeal, by order dated 2.8.2006, the following substantial question of law was raised: “Whether the Appellate Tribunal is right in law and on facts in directing the Assessing Officer to allow deduction on account of purchases at 75% of the purchases exclusively proved to be bogus?” 6)Learned advocate for the appellant has invited our attention to a decision of the Apex Court in the case of Sanjay Oilcake Industries v. Commissioner of Income Tax, (2009) 316 ITR 274 (Guj.) and submitted that the issue involved in this appeal though not squarely covered by the aforesaid decision. 7)We have heard learned counsel for the appellant and perused the material on record. We have perused the decision relied cited by the learned advocate for the appellant wherein it has been held thus : “Having heard the learned Advocates appearing for the respective parties it is apparent that no interference is called for in the impugned order of Tribunal dated 29.04.1994 read with order dated 29.09.1994 made in Miscellaneous Application. In the principal order the Tribunal has recorded following findings : 7)We have heard learned counsel for the appellant and perused the material on record. We have perused the decision relied cited by the learned advocate for the appellant wherein it has been held thus : “Having heard the learned Advocates appearing for the respective parties it is apparent that no interference is called for in the impugned order of Tribunal dated 29.04.1994 read with order dated 29.09.1994 made in Miscellaneous Application. In the principal order the Tribunal has recorded following findings : “8.3. We have considered the rival submissions and perused the facts on record. In our opinion the action of the CIT(A) confirming 25% of the amounts claimed is fair and reasonable and no interference is called for. The CIT(A) has gone through the purchase prices of the raw material prevalent at the time and rightly came to the conclusion that the disallowance to the extent of 25% was called for. It is established that the parties were not traceable; they opened the bank accounts in which the cheques were credited but soon thereafter the amounts were withdrawn by bearer cheques. That fairly leads to the conclusion that these parties were perhaps creation of the assessee itself for the purpose of banking purchases into books of accounts because the purchases with bills were not feasible. Thus the above noted parties become conduit pipes between the assessee firm and the sellers of the raw materials. Under the circumstances, it was not impossible for the assessee to inflate the prices of raw materials. Accordingly an addition at the rate of 25% for extra price paid by the assessee than over and above the prevalent price is fair and reasonable and we accordingly confirm the finding of CIT(A).” Thus, it is apparent that both Commissioner (Appeals) and the Tribunal have concurrently accepted the finding of the Assessing Officer that the apparent sellers who had issued sale bills were not traceable. That goods were received from the parties other than the persons who had issued bills for such goods. Though the purchases are shown to have been made by making payment thereof by Account Payee Cheques, the cheques have been deposited in Bank Accounts ostensibly in the name of the apparent sellers, thereafter entire amounts have been withdrawn by bearer cheques and there is no trace or identity of the person withdrawing the amount from the bank Accounts. In light of the aforesaid nature of evidence it is not possible to record a different conclusion, different from one recorded by Commissioner (Appeals) and the Tribunal concurrently holding that the apparent sellers were not genuine, or were acting as conduit between the assessee firm and the actual sellers of the raw materials. Both Commissioner (Appeals) and the Tribunal have therefore come to the conclusion that in such circumstances, the likelihood of purchase price being inflated cannot be ruled out and there is no material to dislodge such finding. The issue is not whether the purchase price reflected in the Books of Accounts matches the purchase price stated to have been paid to other persons. The issue is whether the purchase price paid by the assessee is reflected as receipts by the recipients. The assessee has, by state of evidence available on record, made it possible for the recipients not being traceable for the purpose of inquiry as to whether the payments made by the assessee have been actually received by the apparent sellers. Hence, the estimate made by the two Appellate Authorities does not warrant interference. Even otherwise, whether the estimate should be at a particular sum or at a different sum, can never be an issue of law. 8)Considering the facts of this case and principle rendered 8)Considering the facts of this case and principle rendered in the above decision, we are of the view that the question raised in this appeal is covered by the decision referred to hereinabove. Hence, the issue is answered against the appellant and in favour of the assesseee. 9)Since the issue is already concluded by the aforesaid decision, we are not assigning elaborate reasons in this appeal. In view of the aforesaid decision of this court, the present appeal deserves to be dismissed and is, accordingly, dismissed. (K.S.JHAVERI, J.) (K.J.THAKER, J) Vahid