M/S Ram Avtar Pareek, 4F, Natraj Colony, Tonk Road, Jaipur v. The Income Tax Officer, Ward 6 (2), Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 274 / 2017 M/s Ram Avtar Pareek, 4F, Natraj Colony, Tonk Road, Jaipur ----Appellant Versus The Income Tax Officer, Ward 6 (2), Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Gunjan Pathak with Mr. Aditya BohraFor Respondent(s) : Mr. Prateek Kedawat for Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE VIJAY KUMAR VYASJudgment 21/12/2017 By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal of the assessee confirming the orders ofboth the authorities. This Court while admitting the matter framed the followingquestions of law:- “i) Whether for depreciation in the subsequent yearto the year in which Section 44AD of the IncomeTax Act, 1961 was applicable, the written downvalue adopted by the Appellant can be disregardedby the Ld. Assessing Officer? ii) Whether any addition under Section 68 of theIncome Tax Act, 1961, is warranted when bookshave been rejected and addition has been madebased on Net Profit Rate?” Counsel for the appellant has taken us to the order of the AO as well as CIT(A) and contended that all the authorities haveseriously committed an error in not considering the provisions ofSection 44AD and Section 68 of the Income Tax Act, as envisaged. He has contended that now the issues are squarely coveredby the decision of this Court in case of Harish Kumar vs. ITO,Bundi in DBITA No. 805/2008 decided on 2[nd] June, 2017 wherein ithas been held as under:- “10. In view of the above, we confirm all thefindings of the Tribunal and CIT(A) and we makeit clear that he can be granted benefit of 44AF onthe basis of regular assessment of all expenseswhich are allowed to the income.” He has relied upon another decision of this Court in case ofShri Vinod Kumar Goyal vs. Commissioner of Income Tax in DBITANo. 59/2008 decided on 5[th] September, 2017 wherein it has beenheld as under:- “4.Counsel for the appellant contended thatAO has seriously committed an error inconsidering the assessment u/s 68 contrary toDivision Bench judgment of this Court in case ofCommissioner of Income Tax vs. G.K. Contractorreported in (2009) 19 DTR 305 wherein it hasbeen held as under:- “7. Admittedly, the said amount of Rs. 38,28,086was shown by the assessee in the books ofaccount as "market outstanding". According to theassessee, the payment was outstanding againstthe labour and goods supplied. It is true that onbeing asked, the assessee was not able to explainthese entries by producing the adequate proof tothe satisfaction of the assessing officer. However,in our considered opinion, even if the assessee hasfailed to discharge his onus of proof in explainingthe cash credits shown in the books of account as"market outstanding", the assessing officer havingestimated the higher profit rate on total contractreceipts after rejection of the books of accountinvoking the provisions of Section 145(3), noseparate additions can be made on account of unexplained cash credit under Section 68 of theAct of 1961. We are in complete agreement withthe view taken by the Commissioner (Appeals),confirmed by the Tribunal. Thus, no substantialquestion of law arises for consideration of thisCourtinthisappeal.8. In the result, the appeal fails, it is herebydismissed. No order as to costs.” 11. The CIT(A) has specifically observed thatthe cash flow statement was produced on recordand taking into consideration the same he hasallowed the appeal. However, the Tribunal in para14 has observed contrary view and in view of thejurisdictional court judgment, regarding books ofaccounts of u/s 68, he reversed the judgment ofCIT(A). unexplained cash credit under Section 68 of theAct of 1961. We are in complete agreement withthe view taken by the Commissioner (Appeals),confirmed by the Tribunal. Thus, no substantialquestion of law arises for consideration of thisCourtinthisappeal.8. In the result, the appeal fails, it is herebydismissed. No order as to costs.” 11. The CIT(A) has specifically observed thatthe cash flow statement was produced on recordand taking into consideration the same he hasallowed the appeal. However, the Tribunal in para14 has observed contrary view and in view of thejurisdictional court judgment, regarding books ofaccounts of u/s 68, he reversed the judgment ofCIT(A). 12.In view of the above, the issue is required to be answered in favour of the assessee against the department. He has further relied upon the decision in case ofCommissioner of Income Tax vs. G.K. Contractor reported in 19DTR 0305 wherein it has been held as under:- “7. Admittedly, the said amount of Rs.38,28,086 was shown by the assessee in thebooks of account as "market outstanding".According to the assessee, the payment wasoutstanding against the labour and goodssupplied. It is true that on being asked, theassessee was not able to explain these entriesby producing the adequate proof to thesatisfaction of the assessing officer. However, inour considered opinion, even if the assessee hasfailed to discharge his onus of proof in explainingthe cash credits shown in the books of accountas "market outstanding", the assessing officerhaving estimated the higher profit rate on totalcontract receipts after rejection of the books ofaccount invoking the provisions of Section145(3), no separate additions can be made onaccount of unexplained cash credit under Section68 of the Act of 1961. We are in completeagreement with the view taken by theCommissioner (Appeals), confirmed by theTribunal. Thus, no substantial question of lawarises for consideration of this Court in thisappeal. 8. In the result, the appeal fails, it is herebydismissed. No order as to costs.” He has relied upon the decision of Karnataka High Court incase of Commissioner of Income Tax & Anr. vs. BahubaliNeminath Muttin reported in 388 ITR 0608 wherein it has beenheld as under:- “The principle that if a finding of fact is notchallenged as being perverse, the High Court isbound to accept such finding. Therefore, as nosuch substantial question of law has beenframed and the questions pertain to findings offact, which cannot be said to be perverse as it isevident that the books of accounts of therespondent had been rejected by the assessingauthority, in which case the same books ofaccounts could not be relied upon in an additionon account of trade creditors and also forarriving at the closing stock. This is anestablished principle as has been held in thedecisions relied upon by the respondent namelyIndwell Constructions case, Banwari LalBanshidhar's case, Aggarwal EngineeringCompany's case and Amman Steel and AlliedIndustries,casesupra.In the light of the above, there is no substantialquestion of law that arises for consideration andthe findings of the Tribunal cannot be said to beperverse, as the reasons assigned by theTribunal are certainly acceptable and do notwarrant interference. Consequently, the appealsaredismissed.” Taking into consideration the above, we are of theconsidered opinion that the issues are now covered by thedecisions referred hereinabove. Hence, both the issues arerequired to be answered in favour of the assessee against thedepartment. The appeal stands allowed. (VIJAY KUMAR VYAS) J.