D.b. Income Tax Appeal v. D.b. Income Tax Appeal

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANBENCH AT JAIPUR. JUDGMENT (1) D.B. Income Tax Appeal No. 65/2000.Commissioner of Income Tax, Jaipur Vs. Smt. Radha Bajaj (2) D.B. Income Tax Appeal No. 64/2000.Commissioner of Income Tax, Jaipur Vs. Smt. Radha Bajaj (3) D.B. CROSS OBJECTION NO.22/2003.In D.B. Income Tax Appeal No. 65/2000.Commissioner of Income Tax, Jaipur Vs. Smt. Radha Bajaj (4) D.B. CROSS OBJECTION NO.21/2003. In D.B. Income Tax Appeal No. 64/2000.Commissioner of Income Tax, Jaipur Vs. Smt. Radha Bajaj DATE OF JUDGMENT : 14.09.2016 HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE BANWARI LAL SHARMA Mr. R.B. Mathur, for appellant-Department. Mr. Vivek Singhal, for the respondent-assessee. ***** BY THE COURT(Per Hon’ble Jhaveri, J.) 1.By way of these appeals, the Department haschallenged the judgment and order of the Tribunal wherebythe Tribunal has dismissed the appeals preferred by theDepartment and allowed the appeals preferred by theassessee against the order of the CIT (A) whereby the CIT (A) has partly allowed the appeal of the assessee. Thecross-objections have also been filed by the respondent-applicant. Since controversy raises identical questions of lawand facts, all these cases are decided by this commonjudgment and order. 2.The facts giving rise to the appeals are that for theassessment years 1989-90 and 1997-98, block asseementyear, the Assessing Officer has passed an order against thepresent respondent-assessee and estimated his income forthe block assessment year. The operative part of the orderreads as under: “Accordingly Rs. 29,28,920/- are taken asundisclosed income of the assessee on account ofinterest income on undisclosed advances of Rs.42,34,000/- The income of the assessee for the block periodis therefore, assessed at Rs. 96,61,065/- on whichtax @ 60% comes to Rs. 57,96,639/-. Issue demandnotice and challan. Also charge interest u/s 158BFA(1). Penalty proceedings for levy of penalty u/s158BFA(2) are being initiated separately.” 3.Against the said order, an appeal was preferred andCIT (A) has partly allowed the appeal preferred by theassessee. Being aggrieved by the same, the assessee haspreferred appeal as well as the Department has alsopreferred the appeal which was dismissed. Five questions oflaw were framed by the Department which read as under: (1)Whether, in the facts and circumstances of thecase, the ITAT is correct in law in reducing theweight gain in soap manufacturing process from15% to 7.5% without any basis or material onrecord ? (2)Whether in the fats and circumstances of thecase, the ITAT was justified in interfering with thefinding of the A.O. regarding weight gain in soapmanufacturing process which was duly confirmed bythe CIT (A) and the same was also supported by thedocumentary evidence as well as practical exercisedone at the time of survey itself ? (3) Whether in the facts and circumstances of thecase, the ITAT was justified in setting aside theaddition of interest income on the ground that it wasnot received whereas the factual position was not indispute that the loan was advanced and the interestincome was undisclosed? (4)Whether in the facts and circumstances of thecase, the ITAT was justified in setting aside theinterest income when the limited dispute before itthat it should be taxed on the accrual or receiptbasis ? (5)Whether in the facts and circumstances of thecase, when the assessee is maintaining books ofaccounts on mercantile basis then the interestshould be calculated on accrual or receipt basis ? 4 3.1While admitting the appeal, no substantial question oflaw was framed and cross-objections have also beenpreferred by the assessee. 4.We have heard the learned counsel for the parties. (4)Whether in the facts and circumstances of thecase, the ITAT was justified in setting aside theinterest income when the limited dispute before itthat it should be taxed on the accrual or receiptbasis ? (5)Whether in the facts and circumstances of thecase, when the assessee is maintaining books ofaccounts on mercantile basis then the interestshould be calculated on accrual or receipt basis ? 4 3.1While admitting the appeal, no substantial question oflaw was framed and cross-objections have also beenpreferred by the assessee. 4.We have heard the learned counsel for the parties. 5.Mr. Mathur has contended that the Assessing Officerafter considering the evidence on record and the statementrecorded and documents which were recovered during thesearch which were loose papers and on the basis of that theassessment was made on the basis of 15%. C.I.T. (A) hasalso gone into details and after considering, therefore, theTribunal has seriously committed an error in allowing theground No.1 and reasoning which are adopted from 1 to 3are erroneous. 6.Counsel for the respondents has contended that theview taken by the Tribunal is just and proper and even theprofit which has been estimated 7.5% required to bereduced to 6.48%. 7.The Tribunal while considering the reasoning inparagraph 13, held as under: “After due consideration of facts, we do not findmuch credibility in the report of Shri S.C. Singhal.Further, the publication of Rajasthan Chamber ofCommerce givinginformationaboutsoapmanufacturing is also distinguishable for the reasonsthat the quality of soap covered by the publication isdifferent from the quality of soap manufactured bythe assessee. This is evident not only from thecomparative sales prices between the component mixof the two. In so far as the report of Rajasthan Consultancy Organisation Ltd. Is concerned, we findthat the organisation is sponsored by severalFinancial Institutions/Banks and all are public sectorundertakings. Thus, this report is morecredible/reliable. Moreover, the report is based oninspection of assessee’s place and actual physicalverification of process and production. We do notaccept the contention of the Id. D/R that this reportshould not be believed. However, considering thefacts and said report, we hold that it would be fairand reasonable if the weight gain is adopted at 7.5%in the case of appellant. The AO has prepared thecalculation of undisclosed income at page 19 ofassessment order in a table taking the weight gain at15%. We hereby direct the AO to recalculate theundisclosed income by adopting 7.5% in place of15% in the said table. We hold accordingly.” 8.In our view, the view taken by the Tribunal is just andproper and no interference is called for. The substantialquestions which have been raised, in our opinion, areappreciation of evidence of law on the basis of evidence onrecord. 9.In that view of the matter, all the issues are answeredin favour of the assessee against the Department. 10.The appeals of the Department are dismissed. The cross-objections also stand disposed of accordingly. (Banwari Lal Sharma), J. (K.S. Jhaveri), J. /bm gandhi 87-90