The Commissioner Of Income Tax Chennai v. Shri C. Jayantilal

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 28.07.2009 CORAM: THE HONOURABLE Mr. JUSTICE F.M. IBRAHIM KALIFULLAandTHE HONOURABLE Mr. JUSTICE B. RAJENDRAN TAX CASE(A)NO.607 OF 2009. --- The Commissioner of Income TaxChennai....Appellant. Vs. Shri C. Jayantilal,C/o Shri S. Ramesh Kumar,Advocate,No.104, Govindappa Naicken Street,Chennai 600 006...Respondent. --- Tax appeal is filed under Section 260-A of the Income Tax ACT1961. against Order of the Income Tax Appellate Tribunal, Madras 'A'Bench dated 17.12.08 in ITA No.1921/MAD/2009 Assessment year 2005-2006. against the order of the Commissioner of Income Tax (Appeals)IV, Chennai dated 25.5.07 in Appeal No.CIT (A)-IV/CHE/669/06-07against the order passed by Income Tax Officer, Ward X(2) Coimbatorein PAN GIR NO.ABPPJ 9672 F. The Revenue has come forward with this appeal challenging theorder of the CIT(Appeals) dated 17.12.2008 passed inI.T.A.No.1921/Mds/2007 in and by which the order of the CIT(Appeals)dated 25.05.2007 was confirmed. 2. The questions of law that arise for consideration in thisappeal are as under:- https://hcservices.ecourts.gov.in/hcservices/ "[i] Whether on the facts and circumstances of thecase, the Tribunal was right in deletion of sum ofRs.37,71,931/- being the difference in stock value found? [ii] Whether on the facts and circumstances of thecase, the Tribunal was right in law in holding that theAssessee has discharged burden of proof cast upon him forRs.11,00,000/- being the advance paid for purchase of landespecially as the same was not shown in the Trial Balance? [iii] Whether on the facts and circumstances of thecase, the Tribunal is right in not considering the factthat the voluntary statement made without any coercion orduress nor retracted given could form basis for theAssessment?" 3. As far as the first question of law is concerned, a perusalof the order of the CIT(Appeals) discloses that the AssessingAuthority solely relied upon a letter of the assessee dated22.03.2005 wherein, the assessee offered a sum of Rs.20,00,000/- forassessment for the year 2005-2006, apart from a sum of Rs.17,71,932/-as stock difference. The CIT(Appeals), after considering the issue,has noted that for arriving at the stock value at the time of survey,the same was valued based on the selling price, while it is thesettled law that the closing stock should be adopted at the costprice or the market price, whichever is less. It was also found thatif it had been worked out on the basis of the cost price or themarket price, the stock deficit of Rs.17,71,932/- could not have beenmade. 4.As far as the amount of Rs.20,00,000/- offered by the assesseein the letter dated 22.03.2005 is concerned, the CIT(Appeals), hadrelied upon the decisions reported in (1995) 54 ITD 116 and (2002)ITR (AT) 69 wherein, it was held that taxation was not based on theagreement between the tax-payer and the Revenue and is levied basedon the income supported by evidence. The CIT(Appeals)also noted thatin respect of a sum of Rs.20,00,000/- offered, except the ipse dixitstatement contained in the letter dated 22.03.2005, there was nosupporting material evidence to establish that there was really anystock deficiency to the tune of the said value. It was on the abovesaid reasoning, the deletion of a sum of Rs.37,71,931/- came to bemade by the CIT(Appeals). As far as the sum of Rs.11,00,000/- whichwas one other discrepancy noted at the time of survey is concerned,the explanation of the assessee was that the said sum was receivedfrom one Mr.Chellappan as advance for the sale of agricultural lands.In support of the said stand, the assessee produced certain documentswhich related to the sale of agricultural lands stood in the names ofJ.Rakesh and J.Meena in favour of Mr.Chellappan. The receipt of thesaid sum was stated to have been shown in the list of trade creditors for which the explanation offered was that the same came to be madedue to lack of accounting knowledge. One other material in support ofthe said stand was the statement of Mr.Chellappan himself, which wasproduced before the Assessing Authority, which has been noted by theAssessing Authority at page No.7 of his order. 5. As rightly pointed out by the CIT(Appeals), none of the abovefactors placed before the Assessing Authority were doubted by theAssessing Authority. In fact, it was pointed out that ifMr.Chellappan's statement had been doubted by the AssessingAuthority, it should have summoned him and put to necessary cross-examination to unearth the truth. It was, therefore, held that in theabsence of any such exercise, the explanation offered by the assesseeought to have been accepted. The above reasoning of the CIT(Appeals),in respect of the sum of Rs.11,00,000/- and its deletion, wasperfectly in order. In any case, the findings of the CIT(Appeals) onthe above two items and its deletion, were based on a detailedconsideration of relevant factors and in any event, such conclusionswere out and out concerning the factual matrix of the case and we donot find any irregularity or illegality in the above conclusionreached by the CIT(Appeals), which was simply confirmed by theTribunal, in its order dated 17.12.2008. 6. When we pursued the impugned order of the Tribunal, we findthat the Tribunal has simply made a statement to the effect that theCIT(Appeals) recorded ample reasons for deleting variousdisallowance's and that the reliefs were granted only based on validgrounds explained by the assessee, and therefore, there was nonecessity to disturb the order of the CIT (Appeals). In thiscontext, we only wish to refer to the following two decisions of theHon'ble Supreme Court, viz., [i] (1967) 66 ITR 462 (Udhavdas KewalramVs. Commissioner of Income-Tax, Bombay City) and [ii}(1972) 86 ITR 44(Nawabganj Sugar Mills Co. Ltd., Vs. Commissioner of Income-Tax ,Delhi and Rajasthan), wherein it has been stated as under and leaveit at that. [i] (1967) 66 ITR 462 (Udhavdas Kewalram Vs. Commissioner ofIncome-Tax, Bombay City) "The Income-tax Appellate Tribunal performs a judicialfunction under the Indian-tax Act: it is invested withauthority to determine finally all questions of fact. TheTribunal must, in deciding an appeal, consider with duecare all the material facts and record its finding on allthe contentions raised by the assessee and the Commissionerin the light of the evidence and the relevant law." [ii} (1972) 86 ITR 44 (Nawabganj Sugar Mills Co. Ltd., Vs.Commissioner of Income-Tax , Delhi and Rajasthan). https://hcservices.ecourts.gov.in/hcservices/ " As laid down by this court in Udhavdas Kewalram Vs.Commissioner of Income-tax, the Income-tax AppellateTribunal has to act judicially in the sense that it has toconsider with due care all material facts and the evidence in favour of and against the assessee and record itsfinding on all the contentions raised by the assessee andthe Commissioner in the light of the evidence and therelevant law. From the discussion contained above it isclear that it cannot be said that the Appellate Tribunal inthe case before us has omitted to consider any materialfact or any material piece of evidence." (Emphasisadded). 7. In such circumstances, the questions of law raised cannot beconsidered in this appeal, inasmuch as there is no question of law,much less a substantial question of law. The appeal fails and thesame is dismissed. No costs. Sd/- Asst.Registrar /true copy/ gs/rns Sub Asst.Registrar To 1. THE INCOME TAX OFFICER WARD X(2), CHENNAI-6. 2. THE COMMISSIONER OF INCOME TAX (APPEALS), IV, 121, MAHATMA GANDHI SALAI, NUNGAMBAKKAM, CHENNAI-34. 3. THE INCOME TAX APPELLATE TRIBUNAL BESANT NAGAR, CHENNAI-90 MBS {CO}TP/20.8.2009.