D.b. Income Tax Appeal v. Shri Vinay Pratap Singh

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANJAIPUR BENCH, JAIPUR D.B. INCOME TAX APPEAL NO.158/2011Commissioner of Income TaxVs. Shri Vinay Pratap Singh Date of Judgment: MARCH 05,2012 PRESENT HON'BLE THE CHIEF JUSTICE MR. ARUN MISHRA'HONBLE MR. JUSTICE NARENDRA KUMAR JAIN-I Mr. Nikhil Simlote on behalf of Mr. R.B. Mathur for theappellant BY THE COURT(Per Hon'ble Jain J.) Heard the learned counsel for the appellant. 2.The Revenue has preferred this Income TaxAppeal under Section 260A of the Income Tax Act challengingthe order dated 22[nd] January, 2010 passed by Income TaxAppellate Tribunal (ITAT) Jaipur Bench 'B', Jaipur affirming theorder of the Commissioner of Income Tax (Appeals)-II, Jaipur.3.The Assessing Officer while going through theaccounts of the assessee noticed that a sum of Rs.16,00,900/-is credited in capital account. Explanation was sought in thisregard and reply of assessee was that it was an advancepayment remitted by M/s India Gems and Beads, USA forsupply of goods, but due to inadvertence the said amount wascredited to the accounts of the assessee in the balance-sheet.However, the Assessing Officer was not satisfied and he addedthe said amount of Rs.16,00,900/- in the income of theassessee and directed to initiate penalty proceedings also. The assessee preferred an appeal. The appellate authority i.e.Commissioner of Income Tax (Appeals)-II, Jaipur vide itsorder dated 28[th]April, 2009 was satisfied with theexplanation/reply furnished by assessee and deleted the saidaddition of Rs.16,00,000/-. The matter was discussed in detailby the appellate authority in Para 1.3 of the order, which isreproduced as under:- “I have considered facts of the case and argumentstaken by Sh.Mundra quite carefully. It is a clear factthat the appellant was making regular exports toM/s India Gems and Beads since last many yearswho was remitting lumpsum payment in advanceagainst such export sales and such advancepayment received were adjusted against suchexport sales from time to time. In this process onperusal of copy of account for F.Y.2002-03 of theaforesaid party was examined it was found thatduring the year the appellant has received 403215US$ equivalent to Rs.1,94,96,560/- as againstwhich the export sales shown to the said party was3,80,916 US$ equivalent to Rs.1,84,05,397/- and itwas also included the export sales of 35000 US$ inrespect of Invoice No.12 dated 26.8.2002.Similarly, in F.Y.2003-04 the appellant has received394779.72 US$ from the said party against whichthe export sales to the said party was of 352134.42US$. However, the banker could not connect theadvance amount received against the export salethrough invoice No.12 for 35000 US$ and informedthe appellant the implication of FEMA provisions. Inorder to avoid proceedings in FEMA the appellanthas again requested the said party to send 35000US$ pending reconciliation at the level of bank toclose FEMA proceedings and obviously in theaccount books it shall be an advance payment. Thenature of any payment received cannot be decidedwith the accounting treatment given and therefore,in my considered view even if due to mistake ormisunderstanding if the accountant has credited thesaid money into the capital account of the appellantit cannot become the part of capital and thenobviously it shall be in the nature of advancepayment which certainly cannot be part of revenuereceipts because looking to the nature of businessthe revenue receipt shall be the export proceedsonly and not the advance amount received. Even inthe past when the advance amount received wasmore or less but they did not assume the character of revenue receipt and in fact actual exportproceeds were only the revenue receiptsirrespective of advance amount received against theexport sale. With this discussion and consideringthe accounting of the appellant for the present A.Y.and for earlier A.Y. factually the said receipt of35000 US$ is only the advance amount whichcannot be treated as part of revenue receipts andwith this discussion the said addition made by AO inmy considered view was not in accordance withaccounting principles and therefore, was notchargeable to tax. AO is therefore, directed todelete the said addition of Rs.16,00,900/-.” 4.The aforesaid finding of Commissioner of IncomeTax (Appeals) was affirmed by Income Tax Appellate Tribunalwhile rejecting the appeal of revenue vide judgment dated22.1.2010, which is impugned in this appeal. 5.Learned counsel for the appellant submitted thatthe Commissioner of Income Tax (Appeals) as well as IncomeTax Appellate Tribunal both committed an illegality in deletingaddition of Rs.16,00,900/-, therefore, both the orders be setaside and the order of the Assessing Officer be restored. 6.We have considered the submissions of thelearned counsel for the appellant and examined the orderspassed by Tribunal as well as appellate authority and we findthat the appellate authority as well as appellate Tribunal bothhave examined the matter in detail and by speaking order,directed to delete the said addition of Rs.16,00,900/-. Thefinding of Commissioner of Income Tax (Appeals) has beenaffirmed by Income Tax Appellate Tribunal also. 7.The question in the present case is only withregard to explanation furnished by assessee in respect ofdisputed amount as to whether it is an income of assessee or it was only an advance? The accounts of previous years weretaken into consideration along with the explanation of theassessee and Commissioner of Income Tax (Appeals) was fullysatisfied with the explanation of assessee and his finding hasbeen affirmed by the Income Tax Appellate Tribunal also. 8.The aforesaid question is only a question of factand there is concurrent finding of fact by both the authoritiesbelow, which cannot be interferred with. The appeal can beadmitted only on substantial question of law. No substantialquestion of law is involved in this appeal. Hence it is dismissedsummarily. (NARENDRA KUMAR JAIN-I),J. (ARUN MISHRA),CJ. BKS/- “All corrections made in the judgment/order have beenincorporated in the judgment/order being emailed.” B.K. SHRIVASTAVAPRIVATE SECRETARY.