Icommisisoner Of Income-Tax Vs, Walchandand Co. P. Ltd.’, (1967) 65 Itr 381 (Sc)As Well As”Decision Of This Court In‘ingersoll Rand (India)Ltd v. The Commissioner Of Income-Tax-Iand Anr.’, I.t.ano.6/2011And Connectedmatters Dated 11.03.2020

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 1 DAY OF OCTOBER 2020 PRESENT THE HON’BLE MR. JUSTICE ALOK ARADHE AND| THE HON’BLE MR. JUSTICE H.T.NARENDRA PRASAD ILT.A. NCO.46 OF 201 BETWEEN: TATA COFFEE LIMITED|NO.57, RAILWAY PARALLEL ROADKUMARA PARK WESTBANGALORE -—- 560 O20 — ADPELLANT. (BY SRI. ANKUR PAI, FOR|SRI. K.R. VASUDEVAN, ADVS.). AND: THE DEPUTY COMMISSIONER OF INCOME TAXCIRCLE 12(4), 14/3, 4 FLOORNRUPATHUNGA ROADRASTROTHANA BHAVAN|OPP. RBI, BANGALORE - 560 OO1.. ... RESPONDENT (BY SRI. K.V. ARAVIND, ADV.) THIS ITA IS FILED UNDER SECTION 260-A OF I.T. ACT,1961 ARISING OUT OF ORDER DATED 28.08.2014 PASSED IN [TA|NO.1113/BANG/2012 FOR THE ASSESSMENT YEAR 2005-06,|PRAYING THAT THIS HON'BLE COURT MAY BE PLEASED TO: (I) FORMULATE THE SUBSTANTIAL QUESTION OF LAW.STATED ABOVE. (II) ALLOW THE APPEAL AND SET ASIDE THE COMMONORDER|OFTHEINCOME.TAXTTATPASSEDTN|ITA NO.1113/BANG/2012 RELATING TO ASSESSMENT YEAR 2005-06|DATED 28.08.2014 TO THE EXTENT OF THE ISSUES RAISED AS|ABOVE. THISLIACOMINGONFOR.HEARING,THISALOK ARADHE J.,DELIVERED THE FOLLOWING: DAY, JUDGMENT This appeal under Section 260A of the Income Tax|Act, 1961 (hereinafter referred to as the Act for short)Nas been preferred by the assessee. Tne subject matterof the appeal pertains to the Assessment year 2005-06.The appeal was admitted by a bench of this Court videorder dated 31.03.2015 on the following substantialquestions of law:| (I)Whether on the facts and circumstances|of the case, the ITAT ts incorrect in|upholding the adhoc disallowance of the|expenditureDy ignoringthat|theseexpenses were wholly and exclusively|incurredforthebDUSINeESoftheappellant?of the case, the ITAT ts incorrect in|upholding the adhoc disallowance of the|expenditureDy ignoringthat|theseexpenses were wholly and exclusively|incurredforthebDUSINeESoftheappellant? (iI)Whether the respondent was Justified in deciding on the reasonability of the|expense without giving any finding or deciding on the reasonability of the|expense without giving any finding or DFODEFFeaSOn)sfor.guestioningthereasonability of the expenses? 2 |Facts leading to filing of the appeal brieflystated are that the assessee is a public limited companyengaged in cultivation, process and export of coffee. Theassessee filed the return of Income on 29.10.2005 forAssessment Year 2005-06 declaring total income ofRs.8.22,13,2/73/-. Tne Assessing Officer selected thecase of the assessee for scrutiny and notice underSection 143(2) of the Act was issued. The Assessing|Officer by an order dated 30.11.2007 disallowed claimsviz., treating the income on sale of shade trees asbusiness income and not a capital asset, disallowance ofclaim under Section 14A, disallowance of expenses inmarketing division, adhoc disallowance of miscellaneousexpenses at Toopran division and disallowance ofentertainment expenses etc. The assessee thereuponfiled an appeal before the Commissioner of Income Tax(Appeals) who by an order dated 29.06.2012 partly allowed the appeal. Being aggrieved, the assessee as—well as the revenue field the appeals before Income TaxAppellate Tribunal (hereinafter referred to as theTribunal’ for short). The Tribunal by an order dated28.08.2014 partly allowed both the appeals. Beingaggrieved, the assessee is in appeal before US.| allowed the appeal. Being aggrieved, the assessee as—well as the revenue field the appeals before Income TaxAppellate Tribunal (hereinafter referred to as theTribunal’ for short). The Tribunal by an order dated28.08.2014 partly allowed both the appeals. Beingaggrieved, the assessee is in appeal before US.| 3.Learned counsel for the assessee whileinviting our attention to paragraphs 22, 23 and 24 of theorder passed by the Tribunal submitted that the basis ofdisallowance has not been mentioned by the Tribunal. Itis further submitted that the TridDunal nas proceeded onthe assumption that the vehicles must have been usedfor personal use by the assessee. It is also urged that.under Section 37(1) of the Act, there cannot be adhocdisallowance of a claim and in case, the AssessingOfficer is not satisfied, he can reject the claim in entiretyunder Section 145(3) of the Act. In support of aforesaidsubmission, learned counsel for the assessee Nas placedrellanceOn|decisionoftheSupremeCourtIn. ICOMMISISONER OF INCOME-TAX VS, WALCHAND|AND CO. P. LTD.’, (1967) 65 ITR 381 (SC)as well as”decision of this court In‘INGERSOLL RAND (INDIA)LTD, VS. THE COMMISSIONER OF INCOME-TAX-IAND ANR.’, I.T.ANO.6/2011AND CONNECTEDMATTERS DATED 11.03.2020. 4On the other hand, learned counsel for therevenue has submitted that the burden is on assessee to.prove the fact that the amount was expended forbusiness purposes. It is further submitted that all theauthorities have recorded findings of fact on the basis ofmeticulous appreciation of evidence on record and theassessee has not been able to point out any perversityin the findings of the fact. It is also urged that adhocdisallowance.IS.permissibleUnder|theaccountingprinciple. It is also urged that the matter standsconcluded by findings of fact and no substantial questionof law arises for consideration in this appeal. 5.|We have considered the submissions madeby learned counsel for the parties and have perused therecord. After having noticed the statutory provisions, wemay take note of the well settled legal principles. It is.the cardinal principle of law that tribunal is fact findingauthority and a decision on facts on the tribunal can begone into by the High Court only if a question has been.referred to it, which says the finding of the tribunal isperverse.[SEE:‘SUDARSHAN SILKS & SAREES VS.CIT’, 300 ITR 205 SCC @ 211(and‘MANGALOREGANESH BEEDI WORKS VS. CIT’, 378 ITR 640 (SC)@ 648].A three judge bench of the Supreme Court in‘SANTOSH HAZARI VS. PURSHOTTAM TIWARI,(2001) 3 SCC 179while dealing with the expression ‘to.be a question of law involving in the case’ held that ‘tobe a question of law involving in the case’, there must.be first a foundation for it laid in pleadings and thequestions emerged from sustainable findings of factarrived at by courts of fact and it must be necessary to decide that question of law for a just and proper decision.of the case. It has been held that entirely a new pointraised for the first time before the High Court is not aquestion involved in a case unless, it goes to the root ofthe matter. In‘HERO VINOTH (MINOR) VS.SESHAMMAL’, (2006) 5 SCC 545while dealing withthe scope of Section 260A of the Act, it was held thatthis court will not interfere with findings of the court,unless the courts have ignored material evidence oracted on no evidence or have drawn wrong inferencesfrom proved facts by applying the law erroneously or thedecision is based on no evidence. | 6.|In the light of aforesaid well settled legalposition, we may advert to the facts of the case,Fromperusal of para 22 of the order passed by the Tribunal, itis evident that the TridDunal has notice that AssessingOfficer has found that details of expenditure incurred bythe assessee are not directly relatable to each heads.The Assessing Officer has bifurcated the expenditure 6.|In the light of aforesaid well settled legalposition, we may advert to the facts of the case,Fromperusal of para 22 of the order passed by the Tribunal, itis evident that the TridDunal has notice that AssessingOfficer has found that details of expenditure incurred bythe assessee are not directly relatable to each heads.The Assessing Officer has bifurcated the expenditure claimed by the assessee under various heads and thenpointed out why expenses meant for a particular headhas been debited under a different head viz., othermarketing expenses. However, the assessee failed togive any reply to tnis aspect. Tne Commissioner ofIncome Tax (Appeals) has re appreciated the evidenceand has observed that quantification of disallowance ison the higher side and therefore, the disallowance hasDeen made on adnoc basis and nas been restricted toRs.25 Lakhs. Similarly, the Tribunal in paragraph 24 has_found that the assessee has not maintained log book ofthe vehicies exhibiting their exclusive usage tnerefore, ithas held that Commissioner of Income Tax (Appeals)has rightly arrived at the conclusion that possibility ofuser other than business purposes cannot be ruled outand therefore, 10% of the disallowance out of the totalexpenses has been upheld. Similarly, in paragraph 27the Tribunal has held that the assessee has not been!able to substantiate the claim incurred for expenditure towards business by producing vouchers. Therefore, theTribunalhasupheldtheorder|passedby|theCommissioner of Income Tax (Appeals). | J «Learned counsel for the assessee was unableto point out any perversity in the findings of fact, whichhasbeenrecordedby theASS@SSINQ|Officer,Commissioner of Income Tax (Appeals) as well as theTribunal. It is pertinent to mention her that even in thesubstantial questions of law no perversity has beenaverred. The scope of interference by this court inexercise of power under Section 260A of the Act is wellsettled. This court in exercise of powers under Section260A of the Act would interfere with the findings of thefact provided the same are shown to be perverse. In theinstant case, the findings recorded by all the authorities|are based on meticulous appreciation of evidence onrecord which by no stretch of imagination can be said tobe perverse. The matter stands concluded by findings offact. Therefore, we hold that no substantial question of 41B�18/030�<;8�9;60/7381:/;6�/6�:./0�122314�� �6�:.3�83054: �:.3�01=3�<1/40�167�/0�.383?@� 7/0=/0037�� ��!"������� ��!"�������00�