Deputy Commissioner Of Income Tax, Central Circle,Bikaner.bikaner v. Non

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANAT JODHPUR -------------------------------------------------------------- CIVIL WRIT (CW) No.6377 of 2014 PETITIONERS: 1.Union of India through the Secretary, Ministry ofFinance, Department of Revenue, Government ofIndia, New Delhi.Finance, Department of Revenue, Government ofIndia, New Delhi. 2.Commissioner of Income Tax, Central-Jaipur ,Central Revenue Building, Bhagwan Das Road,Jaipur.Central Revenue Building, Bhagwan Das Road,Jaipur. 3.Deputy Commissioner of Income Tax, Central Circle,Bikaner.Bikaner. versus NON PETITIONER Surana Woollens Pvt. Ltd., 67-A, Industrial Area,Bikaner-334001. Date of Order: 9.9.2016 HON'BLE MR.SANGEET LODHA,J. Mr. K.K.Bissa, for the Petitioners. ORDER -------- 1.This writ petition has been filed by the Revenue questioning the legality of order dated 25[th] September, 2013 of the Income Tax Settlement Commission('ITSC') under Section 245 D (4) of the Income TaxAct, 1961 ('the Act') for the block period 1.4.91 to23.5.01 under Chapter XIVB of the Act coveringassessment year 1992-93 to 2002-03. 2.The relevant facts are that a search and seizureoperation under Section 132 (1) and a survey underSection 133A was carried out by the Income TaxDepartment at the business premises of the Groupconsisting of the respondent Surana Woollens PrivateLimited, Saswani Woollen Mills and Friends WoollenIndustries as also at the residential premises of thepartners/directors of the Partnership Firm/Company on23.5.01 which continued upto 24.5.01. During thecourse of the search, cash, jewellery, books ofaccounts, registers, diaries and loose papers wereseized. 3.The applicants M/s Surana Woollens Pvt. Ltd., therespondent herein and other five applicants namely Friends Woollen Industries, Saswani Woollen Mills,Narendra Kumar Surana, Champak Mal Surana andGulab Devi Surana, made separate applications underSection 245C(1) of the Act, which were allowed to beproceeded with under Section 245D (1) of the Act videa common order dated 26.2.04 by the Principal BenchITSC, New Delhi. Later, the applications preferred wereassigned to ITSC, Additional Bench II, New Delhi,pursuant to standing order dated 1.8.12 issued by theChairman, ITSC, New Delhi. 4.The matters were heard by the ITSC underSection 245D of the Act. For the purpose ofconsideration of the controversy raised in the presentwrit petition, suffice it to notice that the Commissionerof Income Tax (Central), Jaipur ('CIT') filed reports inabove cases and the applicants filed their reply to thereports. In the report filed in case of the respondent-Surana Woollens Mills Private Limited, the CIT raisedan issue regarding out of books sale of woollen yarn of Rs. 8,73,18,593/- during the financial year 2000-01 onthe strength of a loose paper seized containing thedetails “Sumangal Elect. Nirmal Ji 2000-2001 Sales-87318593”. The respondent in its reply to the report,alleged that the paper relied upon by the CIT is nothingbut a loose paper not bearing any name of theassessee. The stand of the respondent was that thesaid slip has no corroborating evidence to show thealleged turnover of the assessee. The respondentcategorically submitted that it is not related to “M/sSumangal Elect.” or to “Nirmal Ji” and further that theslip is not in the handwriting of the Director of theCompany, Narendra Kumar Surana. 5.After due consideration of the rival submissions,the ITSC arrived at the finding that CIT has not beenable to point out any corroborating evidence in theseized material to link it with the said paper andaccordingly, declined to accept the contention of theCIT that the said slip of paper represents sale of 5.After due consideration of the rival submissions,the ITSC arrived at the finding that CIT has not beenable to point out any corroborating evidence in theseized material to link it with the said paper andaccordingly, declined to accept the contention of theCIT that the said slip of paper represents sale of Rs.8,73,18,593/- of Woollen Yarn during the financialyear 2000-01 and therefore, no addition in this regardwas made. Hence, this petition. 6.Learned counsel appearing for the Revenuecontended that the finding recorded by the ITSC is ex-facie contrary to facts and law. Learned counselsubmitted that the addition was proposed on the basisof the loose paper seized during the search from theresidence of Narendra Kumar, the Director of theCompany. Drawing the attention of the Court to thephoto-copy of the slip, placed on record, learnedcounsel for the Revenue, submitted that on the top ofthe slip “Sumangal Elect.” and “Nirmal Ji” is written.Learned counsel submitted that Nirmal Ji is a closerelative of Surana family. Learned counsel submittedthat on information being gathered from theDepartment of Commercial Taxes, it was revealed thatSumangal Electricals is a proprietorship concern ofNirmal Devani, which is engaged in sale of electric goods. Learned counsel submitted that this relevantaspect of the matter has not been considered by theITSC, which has resulted in erroneous finding beingarrived at and therefore, the order impugned deservesto be set aside. 7.I have considered the submissions of the learnedcounsel for the Revenue and perused the material onrecord. 8.Indisputably, the proceeding before the ITSC under Section 245C and 245D of the Act is akin tostatutory arbitration and the order passed by the ITSCis not open to be interfered with by this Court unless itis found to be contrary to any provisions of the Act. Inany case, this Court in exercise of its extra-ordinaryjurisdiction under Article 226 of the Constitution ofIndia, cannot sit in appeal over the findings of factrecorded by the Settlement Commission.[Vide Union ofIndia & Ors. Vs. Ind-Swift Laboratories Limited, (20114 SCC, 635)]. 9.In the instant case, the Revenue attempted toestablish out of books sale of Woollen Yarn of Rs.8,73,18,593/- solely on the basis of the loose papercontaining the details noticed herein above, by drawinghypothetical inference, without there being anycorroborative evidence to substantiate the allegation.Nothing was brought on record to establish that theproprietor of the business concern Sumangal Electricalsis close relative of Surana family. Moreover, a perusalof the contents of the slip, in no manner leads to theconclusion that the figure disclosed in the sliprepresents unaccounted sale by the respondentassessee to Sumangal Electricals. It is pertinent to notethat the slip does not mention the name of therespondent assessee and it is not proved by anyevidence on record that it is in the handwriting of theDirector of the Company Narendra Kumar Surana.10.Thus, on the facts and in the circumstances of thecase, in absence of any corroborating evidence to link RP RP the contents of the slip to unaccounted sale in thehands of the assessee during the relevant financialyear, the ITSC has committed no error in declining tomake addition of undisclosed sale treating the same tobe the income of the assessee earned without showingany expenses in the process of manufacturing ofWoollen Yarn, as proposed by the Revenue. 11.For the aforementioned reasons, in the consideredopinion of this Court, the conclusion arrived at by theITSC as aforesaid, cannot be said to be capricious orperverse and the order impugned passed does notsuffer from any error apparent on the face of therecord, so as to warrant interference by this Court inexercise of its extra-ordinary jurisdiction under Article226 of the Constitution of India. 12.In the result, the petition fails, it is herebydismissed in limine. (SANGEET LODHA),J.