M/S Rajasthan Textiles Industries v. Commissioner Income Tax, Jaipur

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHANAT JAIPUR BENCH, JAIPUR D.B. Income Tax Reference No.9/1993 M/s Rajasthan Textiles IndustriesVersusCommissioner Income Tax, Jaipur Date of Order : 25/08/2009 Hon'ble Mr. Justice R.C. GandhiHon'ble Mr. Justice K.S. Chaudhari None present for petitioner.Mr. R.B. Mathur, for respondent. (Oral) This reference has been made in compliance of theHigh Court order dated 30.10.1991 passed on the ReferenceApplication of the assessee under Section 256(2) of theIncome Tax Act, 1961. The assessment pertains to the year 1967-68, 71-72 to 75-76 in Reference Application No.141to146/JP/88arising out of ITA Nos.868 to 873/JP/88. The assessee firmconsisted of three partners namely Shri Devendra Kumar,Shri Moolchand and Smt. Keval Devi. They used to carry onthe business of manufacturing sized beams. The firmawarded sole selling agency for selling sized beams producedby it to M/s. Luhadia Brothers, a proprietory concern of Smt.Ratan Devi, wife of one of the partners namely Shri DevendraKumar. Smt. Ratan Devi used to carry on her business of sale through Shri Madanlal Sethi, her sister's son. Shri NirmalKumar s/o. Smt. Ratan Devi also assisted her in the business.The assessee firm claimed before the Income Tax Officer thatit be paid the following commission to M/s. Luhadia Brothers: Rs.13,919/- for 1967-68 Rs.19,811/- for 1971-72 Rs.13,712/- for 1972-73 Rs. 3,946/- for 1973-74 Rs.15,844/- for 1974-75 Rs. 2,552/- for 1975-76 The Income Tax Officer disallowed the gross amount of commission paid to Smt. Ratan Devi holding her tobe the Benamidar of the assessee invoking the provisions ofSection 40A(2)(A) of the Income Tax Act. The assesseepreferred appeals before the Appellate AssistantCommissioner, B-Range, Jaipur who allowed the appeals. TheRevenue preferred appeals before the Income Tax AppellateTribunal against the order of the Appellate AssistantCommissioner, who accepted the appeals vide order dated28.06.1983. A Miscellaneous Application for modification oforder dated 28.06.1983was filed before the Tribunal. TheTribunal modified the order by allowing the application partlyvide order dated 05.06.1984. The Income Tax Officer started proceedings underSection 271(1)(c) for imposition of penalty. He issued noticeto the assessee. It was challenged by way of appeal before the Appellate Assistant Commissioner. The appeals wereallowed. The Revenue challenged the order of the AppellateAssistant Commissioner before the Tribunal. The Tribunal,vide order dated 15.01.1988, allowed the appeals of theRevenue and further directed that Income Tax Officer torecompute the penalty on the net addition made in theincome of the assessee on account of bogus claim ofcommission. Under these circumstances, this reference hasbeen made at the instance of the assessee for opinion of theCourt on the following question of law: "Whether on the facts and in thecircumstances of the case, the assessingauthority was justified in imposing penaltyunder Section 271(1)(c) of the Act on theassessee and as to whether the Tribunal wasjustified in upholding the order passed by theassessing authority with the modification madeby it in the order dated 15.01.1988?" The assessee has not turned up to assist the Court,soliciting opinion of the Court. We have perused the interimorders recorded in this file. Notice was issued to theassessee, at whose instance reference has been made, askinghim to prepare or cause to be prepared the paper bookswithin three months from the date of receipt of this notice.Notice was served upon the assessee and the respondent.The reference was listed before the Court on 03.08.1994. The assessee has not turned up to assist the Court,soliciting opinion of the Court. We have perused the interimorders recorded in this file. Notice was issued to theassessee, at whose instance reference has been made, askinghim to prepare or cause to be prepared the paper bookswithin three months from the date of receipt of this notice.Notice was served upon the assessee and the respondent.The reference was listed before the Court on 03.08.1994. The assessee did not opt to appear whereas Mr. G.S. Bapna,learned Advocate General appeared on behalf of therespondent. It was again listed on 17.01.1996, Mr. K.S.Gupta appeared on behalf of the petitioner. Today theassessee is not present. Under these circumstances, wereturn the reference back as unanswered. (K.S. Chaudhari) J. (R.C. Gandhi) J. Mohit