D.b. Income Tax Reference Application v. Shrishrikumar

D.B. Income Tax Reference Application No.56/1994(Commissioner of Income Tax Versus ShriShrikumar) ::4[th] February, 2010 Date of Order HON'BLE MR. JUSTICE K.S. RATHOREHON'BLE MR. JUSTICE MAHESH BHAGWATI Mr. J.K. Singhi ) for the RevenueWith ) Mr. Anuroop Singhi) Mr. N.M. Ranka, Senior Counsel) with ) counsel forMr. N.K. Jain ) the Assessee By way of this reference application filed under Section 256 (2) ofthe Income Tax Act, 1961, the revenue hascanvassed that he submitted a referenceapplication under Section 256 (1) of theIncome Tax Act before Income Tax AppellateTribunal, Jaipur Bench, Jaipur requestingthe Tribunal to refer the followingquestions of law for the opinion of theHigh Court:- 1.Whether on the facts and inthe circumstances of the caseand in law, the order of theTribunal is perverse?the circumstances of the caseand in law, the order of theTribunal is perverse? 2.Whether on the facts and inthe circumstances of the caseand in law, the Tribunal wasright:the circumstances of the caseand in law, the Tribunal wasright: i) in accepting possessionof 46.300 Kgs. of silverornaments as on approvalfrom M/s. Lodhilal RadhaGovind not consideringthe fact that the saidpartywasnotmaintainingstockregister and it wasalmost its entire stockwhich had been given toassessee for sale whichis not the normalpractice of business?of 46.300 Kgs. of silverornaments as on approvalfrom M/s. Lodhilal RadhaGovind not consideringthe fact that the saidpartywasnotmaintainingstockregister and it wasalmost its entire stockwhich had been given toassessee for sale whichis not the normalpractice of business? ii)in rejecting the workingadopted for valuation ofsilver by the IAC toascertainavailabilityof stock by M/s LodhilalRadhaGovindandapplying a lower ratewithout any evidence andbasis?adopted for valuation ofsilver by the IAC toascertainavailabilityof stock by M/s LodhilalRadhaGovindandapplying a lower ratewithout any evidence andbasis? iii)in not taking intoaccount the fact thattheallegedletterregarding delivery ofgold by M/s. LodhilalRadha Govind was foundat the time of searchbut a similar letterregarding delivery ofsilver was not found andthis clearly indicatedaccount the fact thattheallegedletterregarding delivery ofgold by M/s. LodhilalRadha Govind was foundat the time of searchbut a similar letterregarding delivery ofsilver was not found andthis clearly indicated the manipulation? iv)in ignoring the factthat in normal practicewhen one trader sendsgoods to other onapprovalbasisnoentries are passed inthe regular books but asperprocedureofaccounting approval memois issued and entriesare made in stockregister?that in normal practicewhen one trader sendsgoods to other onapprovalbasisnoentries are passed inthe regular books but asperprocedureofaccounting approval memois issued and entriesare made in stockregister? v) in drawing an inferenceotherwise than that thedeviation from normalpractice and procedureof business by M/s.Lodhilal Radha Govind bymaking entries in booksof account regardinggoods sent on approvalbasis was meant toaccommodate the assesseeto enable him to explainthe source of silverornaments?otherwise than that thedeviation from normalpractice and procedureof business by M/s.Lodhilal Radha Govind bymaking entries in booksof account regardinggoods sent on approvalbasis was meant toaccommodate the assesseeto enable him to explainthe source of silverornaments? vi)in not taking note ofoverall conduct of theassesseeparticularlywith regard to non-disclosure of existenceof concealed almirah byShri Nem Prakash who wasoverall conduct of theassesseeparticularlywith regard to non-disclosure of existenceof concealed almirah byShri Nem Prakash who was vi)in not taking note ofoverall conduct of theassesseeparticularlywith regard to non-disclosure of existenceof concealed almirah byShri Nem Prakash who wasoverall conduct of theassesseeparticularlywith regard to non-disclosure of existenceof concealed almirah byShri Nem Prakash who was virtually conducting thebusiness of the assesseeand very well conversantwith its affairs and hedenied any knowledgeabout the almirah butsubsequently handed overthe key? Vii)inignoringthediscrepancy that how thegross weight of goldornaments received fromShri Navrattanmal Sonicould be 910.300 Gms.While ornaments havinggross weight of 464.900gms. only were left withhim after receiving 284gms. by assessee fromhis prior to 10.3.84 andsent to Shri Shiv Kumarof Delhi? and also innottakingintoconsiderationthediscrepancy that voucherNo. 25 was dated 10.3.84and voucher No. 26 wasallegedlyissuedon6.3.84? and also, in nottakingintoconsideration the over-writings in the monthcolumn of the vouchers?andalsoinnot considering the purchase voucher No. 9 which shows that signatures are fabricated as theydiffer?differ? Viii)in not considering theinfirmitiesand discrepancies noted in the statements of ShriHeeralal, Prop. LodhilalRadha Govind recorded atthe time of survey on11.5.84?”Heeralal, Prop. LodhilalRadha Govind recorded atthe time of survey on11.5.84?” 2. Despite the aforesaid questions being the pure questions of law whichneeded adjudication thereof, the learnedAppellate Tribunal rejected the referenceapplication on 13[th] October, 1993. Therevenue has prayed that the referenceapplication be allowed and the Tribunalmay be directed to refer the aforesaidquestions of law along-with statement ofthe case for the decision by this Court. 3.Heard learned counsel for theparties and carefully perused the relevantmaterial on record. 4.Learned counsel for the revenuecanvassed that the proposed questions werepurely the questions of law and the learned Tribunal sans considering andappreciating the relevant material as alsothe evidence, rendered a perverse orderrejecting the reference application. Thelearned Tribunal did not take into accountthis fact that the letter regardingdelivery of gold by M/s. Lodhilal RadhaGovind was found at the time of search,but a similar letter regarding delivery ofsilver was not found, which tangiblyindicated a manipulation by the assessee.Hence, all the aforesaid questions need tobe adjudicated by the Court. Hence, thelearned Appellate Tribunal may be directedto make a reference of substantialquestions of law to this Court. 5.E Contra, the learned counsel forthe assessee has vehemently assailed thesubmissions made by the learned counselfor the revenue and canvassed that albeitthe gold and silver, which were receivedby the assessee from M/s. Lodhilal RadhaGovind on approval were not recorded inhis books of accounts but this silver wasvery well found to have been recorded inthe books of accounts of M/s. Lodhilal Radha Govind. This firm is a regularassessee and his books of accountsinspires confidence. Learned counsel forthe assessee took us to the order dated 9[th]January, 1990 rendered by the Income TaxAppellate Tribunal and contended that thelearned Tribunal having found the decisionof the Tribunal depending on facts did notfind any referable question of law, areference of which could be made to theHigh Court and thus, rejected theirprayer. The tax reference made by therevenue is devoid of substance and thesame deserves to be dismissed. 6.Havingreflectedoverthesubmissions made at the bar and carefullyperused the relevant material on record,we notice that the order dated 9[th] January,1990 rendered by the Income Tax AppellateTribunal is exclusively based on facts. Wealso notice that the learned Tribunalelaborately discussed the facts and havingminutely appreciated them concluded thatthere was no referable question of law,which could be referred to the High Courtfor its adjudication. 8 7.Sub-section (2) of Section 256 ofIncome Tax Act (now stands omitted)envisaged that if on an application madeunder sub-section (1), the AppellateTribunal refused to state the case on theground that no question of law arose, theassessee or the Commissioner as the casemay be, could apply to the High Court andthe High Court could, if it was notsatisfied with the correctness of thedecision of the Appellate Court, requirethe Appellate Tribunal to state the caseand to refer it accordingly, but in theinstant case, no substantial question oflaw is found to have arisen, which mayneed adjudication by this Court. 8.It is relevant to record that thepresent reference application underSection 256 (2) of the Income Tax Act,1961 relates to the Assessment Year 1985-86. The learned Appellate Tribunal rightlyobserved that the decision dated 9.1.1990of the Tribunal was tangibly based onfacts and no referable question of lawarose and thus, the learned AppellateTribunal rightly dismissed the reference application. 9.Learned counsel for the revenuealbeit endeavoured to impress upon, butcould not convince us to take a contraryview to that of the view taken by thelearned Appellate Tribunal. We are in fullagreement with the finding arrived at bythe learned Appellate Tribunal that nosubstantial question of law is found tohave arisen in the instant case. 10.For the reasons stated above, theincome tax reference application filedunder Section 256 (2) of the Income TaxAct, 1961 being totally bereft of anymerit deserves to be dismissed and thesame stands dismissed accordingly. (MAHESH BHAGWATI),J. (K.S. RATHORE),J.DK/-