M/S. Vimal Alloys Ltd v. Commissioner Of Income Tax,Patiala

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 475 of 2005Date of decision: 11.3.2011 M/s. Vimal Alloys Ltd. --- Appellant Versus Commissioner of Income Tax,Patiala --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. D.K. Goyal, Advocatefor the appellant-assessee. Mr. Tejinder K. Joshi, Standing Counselfor the respondent-Revenue. --- AJAY KUMAR MITTAL, J. This order will dispose of two appeals, i.e. Income Tax AppealNos. 475 and 476 of 2005 as counsel for the parties submit that identicalquestions are involved therein. The facts are taken from Income TaxAppeal No. 475 of 2005. This appeal under Section 260A of the Income-Tax Act, 1961(for short “the Act”) has been filed by the assessee against the orderdated 6.4.2005, passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘A’ Chandigarh (in short “the Tribunal”) in ITA No.77/CHANDI/2002, relating to the assessment year 1998-1999. The following substantial questions of law have been claimedfor determination of this Court: i)Whether under the facts and circumstances of the case canthere be any enhancement of income by disallowance of losson account of the regular accepted trade practice, norms andon account of the handling of the material?there be any enhancement of income by disallowance of losson account of the regular accepted trade practice, norms andon account of the handling of the material? ii)Whether under the facts and circumstances of the case theburden of proof as laid on the assessee having beendischarged on the basis of the documents produced beforethe Assessing Authority for the claim of the loss the onusstood discharged?burden of proof as laid on the assessee having beendischarged on the basis of the documents produced beforethe Assessing Authority for the claim of the loss the onusstood discharged? iii)Whether the Tribunal is justified in arriving at a conclusionwhich is not in consonance with the facts, evidence and thearguments raised thus, is contrary to the same leading to aperversity?which is not in consonance with the facts, evidence and thearguments raised thus, is contrary to the same leading to aperversity? The facts, in brief, necessary for adjudication as narrated inthe appeal, are that return of income for the assessment year 1998-99was filed by the assessee on 17.11.1998 showing income of Rs.12,08,140/-. The return was processed under Section 143(1)(a) of the Actand consequently, the assessing officer vide order dated 30.11.2000made an addition of Rs.1,49,800/- on account of non-establishment ofshortage, being 1% of the scrap imported by the assessee weighing1511.520 metric tonnes and, thus, disallowed the claim of the assesseefor shortage. Feeling aggrieved by the order of the assessing officer, theassessee filed appeal before the Commissioner of Income-tax (Appeals) {in short “the CIT(A)”}, raising various grounds. The CIT(A) allowed theappeal vide order dated 21.11.2001. This led to filing of appeal before theTribunal by the Revenue. The Tribunal, vide order appealed against herereversed the order of the CIT(A). It is how the assessee is once again in appeal now before this Court. We have heard learned counsel for the parties and haveperused the record. The issue that arises for consideration in this appeal is,whether the Tribunal was justified in disallowing the claim of the assesseeon account of shortage of imported scrap amounting to Rs. 1,49,800/-. The Tribunal in para 2.2 of its order had noticed that thegoods of the assessee were insured but in spite of the same theassessee did make any claim in respect of goods imported which werefound to be short at the time of delivery. It was further recorded that theclaim of the assessee relating to shortage of scrap was not substantiated.The observations of the Tribunal relevant to the issue under considerationare as under: It is how the assessee is once again in appeal now before this Court. We have heard learned counsel for the parties and haveperused the record. The issue that arises for consideration in this appeal is,whether the Tribunal was justified in disallowing the claim of the assesseeon account of shortage of imported scrap amounting to Rs. 1,49,800/-. The Tribunal in para 2.2 of its order had noticed that thegoods of the assessee were insured but in spite of the same theassessee did make any claim in respect of goods imported which werefound to be short at the time of delivery. It was further recorded that theclaim of the assessee relating to shortage of scrap was not substantiated.The observations of the Tribunal relevant to the issue under considerationare as under: “2.2. We have heard the rival submissions, perused the orderof tax authorities and gone through the material available onrecord. We find that the assessee though has insured thegoods has not claimed the same while taking delivery of thegoods imported by it only on the ground that it wanted to avoidlitigation and time to claim such insurance, whereas thedocuments furnished in respect of the assessee’s claim tohave received shortage of imported goods have been issuedby the agents appointed by the assessee only. Since the assessee itself has chosen not to claim insurance, though thesame was made by the assessee for prospective loss, in ourconsidered opinion, the claim of the assessee on account ofshortage of scrap was not established. We, therefore, in viewof facts of the case, hold that the CIT(A) was not justified indeleting addition made by the AO. We, therefore, set aside theorders of the CIT(A), restore that of the AO and accept theground raised by the revenue for both the years.” Learned counsel for the assessee was unable to furnish anyexplanation, much less a satisfactory explanation for not filing the claimfor insurance on account of shortage of scrap in spite of the fact that thegoods were insured. The finding recorded by the Tribunal is a finding offact based on appraisal of material available on record. No error of law orperversity could be pointed out by the learned counsel for the assesseethat may warrant interference by this Court. Finding no merit in the appeals the same are dismissed. (AJAY KUMAR MITTAL) JUDGE March 11, 2011 *rkmalik* (ADARSH KUMAR GOEL) JUDGE