Income Tax Appeal v. M/S Charbhuja Trading Co Bhilwara

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR -------------------------------------------------------- INCOME TAX APPEAL No. 119 of 2006 V/S M/S CHARBHUJA TRADING CO BHILWARA Mr. KK BISSA, for the appellant / petitioner Date of Order : 25.9.2008 HON'BLE SHRI N P GUPTA,J. HON'BLE SHRI KISHAN SWAROOP CHAUDHARI,J. ----- This appeal has been filed by Revenue, against thejudgment of the Tribunal dt. 2.2.2005, accepting the appealof the assessee, and deleting the addition made by theAssessing Officer, and confirmed in appeal, so alsotreating form No.12 to have been filed on 28.1.1992, andat the same time, holding, that the Assessing Officer hasnot verified the statements made by the assessee. The appeal was admitted by framing following threesubstantial questions of law: “1.Whether in the facts andcircumstances, the Tribunal wasjustified in deleting the additionand setting aside the order ofassessing officer as confirmed byCIT (Appeal) without assigning anyreasons for taking a differentview then what has been taken byauthorities below ? 2.Whether there was any materialbefore the Tribunal to reverse thefindings reached by the lowerauthorities about the state ofaffairs of the books of accountsproduced by the assessing officerand consequently resorting to bestjudgment assessment? 3.Whether in the facts andcircumstances of the case, theTribunal was justified in law inallowing Registration of the Firmunder Section 184 (7) of the Actof 1961 without there being anyapplication having been moved whenaccording to the admitted case ofthe assessee the earlier counselhas failed to produce theapplication of the registration ofthe firm ?” So far as first two questions are concerned, order ofthe Tribunal shows, that all the Tribunal has done, is toquote the observations of the learned Commissioner, made inpara 3.1, then has reproduced the submissions, made onbehalf of the assessee, and then has straightway, held asunder: “I am convinced that the assesseehad maintained proper books whichwere only audited and the assesseehad traded for only five monthsstarting from October to February,I accept the ground of appeal andset aside the findings of the CIT(A) and delete this addition.” It is required to be grasped, that the learned Tribunalunder the scheme of things, is a final court of fact as appeal under section 260-A, lies only on substantialquestions of law, with the consequence that, learnedTribunal is required to go into all factual aspects of thematter, appreciate them and then record its own findings. So far as finding recorded by the Tribunal, as quotedabove, is concerned, on the face of it, some of thefindings of the Assessing Officer, and the learnedCommissioner, of course, did not appear to be sustainable,but at the same time, the finding albeit the crypticfinding, recorded by the Tribunal, is also not sustainable.A look at the order of the Assessing Officer shows, that ithas positively been recorded, that according to theassessee, the books of account were misplaced somewhere byhis erstwhile advocate late Shri Basanti Lal Jain, and arenot traceable, therefore, the same had not been filed, andhad simply filed audited account, which has not beenaccepted. Thus, the finding of the learned Tribunal aboutassessee having maintained proper books, which were dulyaudited, is, on the face of it, unsustainable, being deadagainst the assessee's own case, as it is writ at large onrecord, that the Cotton Corporation of India has certifiedto have purchased the cotton from the assessee to the tuneof Rs.1,44,12,908/-, while the assessee has disclosed thesale to the tune of Rs.1.24 crore. In absence of books ofaccounts and in absence of any discussion of material, tobe available with the Tribunal, to believe, the appellant to have undertaken sell worth Rs.1.24 crore only, thefinding, on the face of it, is bad. Likewise, so far asfinding of the learned Commissioner and Assessing Officeris concerned, may be that books of accounts were notproduced, but then to allow deduction of expenses in paltryamount of Rs.40,000/- only, on the face of it is absurd. Asappears from the submissions, recorded by the learnedTribunal, that the assessee has satisfied the names oftransporter, purchaser, data bilty and lorry number, weightand amount of freight. Likewise, other external evidence aswas available to support the expenditure was also produced,which has not been considered by the learned authoritiesbelow and the Tribunal as well. Then it is required to becomprehended, that a person transacting business worth morethan Rs.1.44 crore, could not be able to manage thebusiness by incurring the paltry expenses of Rs.40,000/-under the different heads. We may make it clear, that we should not be understoodto the recording findings on any of the items either way,so as to influence decision to be arrived at by the learnedTribunal. The observations made are only for the purpose ofappreciating the unsustainable finding recorded by theTribunal. Thus, the first two questions as framed are required tobe, and are answered in favour of the Revenue and against the assessee. So far as question No.3 is concerned, it is required tobe reappreciated by the Tribunal. Firstly, as to whether,it is established that the assessee has submitted formNo.12 on 28.1.1992 as alleged, and if is found to have notbeen submitted, then the consequences thereof were alsorequired to be gone into on the basis of the legalprovisions, as they existed at the relevant time, and onthe basis of case law, if any. Thus, the question No.3 is answered, in the manner thatthe Tribunal was not justified in allowing registrationwithout examining about the aspect of the matter. In the result, the appeal is allowed and the matter isremitted back to the Tribunal for deciding the appealafresh on all aspects, keeping in view the observationsmade above. ( KISHAN SWAROOP CHAUDHARI ),J. ( N P GUPTA ),J. /m.asif/