Itxa/857/2016 Of Pr. Commissioner Of Income Tax-19 v. Rahul J. Jain

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.857 OF 2016 The Pr. Commissioner of Income Tax-19 .. Appellant v/s. Shri. Rahul J Jain .. Respondent Mr. Ashok Kotangle a/w Ms. Padma Divakar for the appellant None for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. P.C. DATED : 11[th] DECEMBER, 2018. 1.This Appeal under Section 260-A of the Income Tax Act, 1961(the Act) challenges the order dated 28[th] September, 2015 passed bythe Income Tax Appellate Tribunal (the Tribunal). This appeal relatesto Assessment Year 2009-10. 2.The Revenue urges following questions of law for ourconsideration :- (i)Whether on the facts and in the circumstances of the case andin law, the Tribunal erred in upholding the order of the CIT(A)thereby giving relief to the assessee even when the Assessing Officer has categorically recorded the defects in the Audited Books ofAccounts as furnished by the assessee? (ii)Whether on the facts and in the circumstances of the case andin law, the Tribunal erred in holding that the assessee hassubmitted sufficient information on the basis of which the AssessingOfficer could have done requisite verification, without appreciatingthat the Assessing Officer has indeed done requisite verification as isevident from the Assessment Order, thereby making the order of theTribunal as perverse? 3.The respondent is engaged in the business of trading in ferrousand non-ferrous metals. The respondent filed its return of income forthe subject assessment year declaring loss of Rs.18.74 lakhs. Duringthe scrutiny proceeding, the respondent was unable to produce itsphysical books of accounts, evidences for sales, purchases and expensesclaimed in the view of the same being destroyed due to flood on 8[th]July, 2009. The respondent assessee filed necessary evidenceindicating the destruction of physical accounts due to heavy rains on 8[th]July, 2009. Besides, it also filed evidences of its sellers and buyers tosupport its claim of loss. However, by order dated 30[th] December,2011, the Assessing Officer assessed the income of the respondent atRs.57.95 lakhs under the head 'business' as against the loss of Rs.18.74 lakhs as shown by the respondent in its return of income. 4.Being aggrieved by the order dated 30[th] December, 2011 of theAssessing Officer, the respondent preferred an appeal to theCommissioner of Income Tax (Appeals) [CIT(A)]. By an order dated15[th] July, 2013, the CIT(A) allowed the respondent's appeal inter alia bynoting the fact that the respondent had produced various documents insupport of its claims for expenses, after recording the fact that variousconfirmation letters from the parties who had made purchases werealso filed. However, the Assessing Officer did not carry out any furtherverification in regard to it. The CIT(A) also recorded the fact that thereturn as submitted should be accepted keeping in view of the fact thatthere was a sharp and continuous fall in nickel prices which is the mainingredient in stainless steel. Further, the appellant has made morethan 90% of the sale during the year, out of the opening stock held by itas a carried forward from the earlier year. Moreover, it also takescognizance of the fact that the respondent's book results were alsoaccepted by the Sales Tax and Central Excise authorities. For all theabove reasons, the appeal of the respondent assessee was allowed byorder dated 15[th] July, 2013 of the CIT(A). 5.Being aggrieved with the order dated 15[th] July, 2013 of theCIT(A), the Revenue filed further appeal to the Tribunal. By theimpugned order dated 28[th] September, 2015 the Tribunal recorded thefact that in view of loss its physical books of accounts due to heavyrains. It also notes the fact that the respondent had produced variousdocuments from its sellers / buyers and submitted the same to theAssessing Officer. The Tribunal after perusing the documents recordedthat confirmations of sales and purchases by the respondent were alsofiled. Besides, documentary evidence to support the assessee's claimcontaining sufficient particulars on the basis of which requisiteverification from the parties mentioned therein could have been doneby the Assessing Officer, if he has any doubt in regard to the documentssubmitted. Further, the Tribunal notes that the documents submittedin support of their claim were not disputed by the Revenue before theTribunal. Further, the impugned order also records fall in the prices ofthe steel in the global market which lead to a loss of the sales made bythe respondent. In these circumstances, the appeal of the Revenue wasdismissed. The Tribunal in its order observed as under :- “We can very well appreciate that at times, the Assessing Officer hasno choice but to make a best judgment assessment. But in ourconsidered view, the fairness of justice demands that 'best judgmentassessment' should not be made as a 'best punishment assessment'. 6.We note that both the CIT(A) and the Tribunal on examination ofthe facts have come to the conclusion that there was material evidenceavailable before the Assessing Officer for him to carry out necessaryinvestigation to determine whether or not the loss suffered by therespondent assessee was justifiable. The best judgment assessment cancertainly be resorted to by the Assessing Officer in the absence of anyrecord, but it cannot be arbitrary. This is more particularly so whenvarious supporting documents justifying their loss return was filedbefore the Assessing Officer and he had completely ignored the same.We find that this appeal essentially is in respect of question of facts. 7.In the above view, the question as proposed does not give rise toany substantial question of law. Thus, not entertained. 8.The appeal is dismissed. No order as to costs. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)