The Commissioner Of Income-Tax Haryana,Rohtak v. M/S. Kailash Rice Mills, Pehowa

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R.No.178 of 1989 DATE OF DECISION: JULY 03, 2008 The Commissioner of Income-tax Haryana,Rohtak .....APPLICANT Versus M/s. Kailash Rice Mills, Pehowa ....RESPONDENT CORAM:HON'BLE MR.JUSTICE SATISH KUMAR MITTALHON'BLE MR.JUSTICE RAKESH KUMAR GARG--- Present:Mr. Sanjeev Kaushik, Advocate,for the revenue. Mr.Sanjay Bansal, Senior Advocatewith Mr.Parshant Bansal andMr.Parveen Saini, Advocates,for the assessee. .. SATISH KUMAR MITTAL, J. The Income Tax Appellate Tribunal, Chandigarh Bench,Chandigarh (hereinafter referred to as `the Tribunal') has referred thefollowing substantial questions of law for the opinion of this court, whichare arising out of ITA No.169 of 1981 in case of the assessee for theAssessment Year 1979-80:- “1. Whether the Tribunal was right in deleting the additionof Rs.10,000/- even when the assessee hasunequivocally surrendered the amount to be taxed asits income?of Rs.10,000/- even when the assessee hasunequivocally surrendered the amount to be taxed asits income? 2. Whether the Tribunal is right in deleting the addition of I.T.R.No.178 of 1989 Rs.10,000/- from the income of the assessment year1979-80 on the ground that this deposit did not fall inthe previous year for this year?” In this case, the assessment year involved is 1979-80 forwhich the relevant previous year ended on 31.3.1979. The assessee is apartnership firm and was engaged in the business of manufacturing of rice.On 9.5.1978, the assessee had shown a cash credit of Rs.10,000/- in thename of Prithi Singh. During the course of assessment proceedings, theAssessing Officer enquired about the genuineness of the said cash creditand asked the assessee to establish its genuineness. By that time, PrithiSingh had expired and the assessee came forward with an affidavit ofDharam Singh son of Prithi Singh in support of his contention. TheAssessing Officer asked the assessee to produce Dharam Singh and to filethe evidence of agricultural income and mutation of land etc. In responseto the said requirement, the assessee filed the revised return on 17.7.1980and surrendered the said credit of Rs.10,000/- while making the statementthat the said cash credit was advanced by Prithi Singh, who had sinceexpired, and his son Dharam Singh felt hesitant to appear before theAssessing Officer, therefore, in order to put an end to litigation and toavoid multiplicity of the proceedings, the assessee surrendered the abovecredit subject to no penal action. The Assessing Officer did not accept thesaid offer and added the said cash credit of Rs.10,000/- being theassessee's own unexplained income. The appeal of the assessee was dismissed by the AssistantCommissioner and the order of the Assessing Officer was confirmed. Onfurther appeal by the assessee to the Tribunal, the Tribunal allowed the I.T.R.No.178 of 1989 -3- appeal while observing that in view of the facts stated by the lowerauthorities, the cash credit was undoubtedly not genuine, but in its opinionit could not be subjected to tax for the Assessment Year underconsideration as it does not fall in the “previous year” which started muchafter the said credit found place in the books before the business was setup. Against the aforesaid order, the Department got referred theaforesaid two substantial questions of law for the opinion of this Court. We have heard the counsel for the parties. The appeal of the assessee was dismissed by the AssistantCommissioner and the order of the Assessing Officer was confirmed. Onfurther appeal by the assessee to the Tribunal, the Tribunal allowed the I.T.R.No.178 of 1989 -3- appeal while observing that in view of the facts stated by the lowerauthorities, the cash credit was undoubtedly not genuine, but in its opinionit could not be subjected to tax for the Assessment Year underconsideration as it does not fall in the “previous year” which started muchafter the said credit found place in the books before the business was setup. Against the aforesaid order, the Department got referred theaforesaid two substantial questions of law for the opinion of this Court. We have heard the counsel for the parties. Learned counsel for the assessee submitted that in this casethe total tax effect is near-about Rs.2500/-. This fact has not been disputedby the counsel for the revenue. In view of the said factual position as wellas keeping in view the fact that this case pertains to the Assessment Year1979-80. we are of the opinion that the questions referred by the Tribunaldo not require consideration by this Court because the amount involved istoo small. For taking this view, we can draw support from the judgment ofthis Court in Commissioner of Income-tax, Rohtakvs. Shri K.L.Saluja, C/oM/s Bharat Tractor, Charkhi Dadri(Income Tax Reference No.36 of 1991,decided on February 21, 2005) wherein the question referred by theTribunal was not considered by this Court because the amount involvedwas very small. This view is also supported from the judgment of the FullBench of this Court in Commissioner of Income-taxvs. Smt.Aruna Luthra,`[2001] 252 ITR 76 (P&H), wherein it has been observed that on aconsideration of the matter, we find that the dispute relates to theassessment year 1987-88. The parties have been litigating for more than 13years. The ultimate tax effect is limited. Thus, even though the decision on I.T.R.No.178 of 1989 -4- the question of law is in favour of the Revenue, we are not inclined tointerfere with the order passed by the Tribunal.' The view taken by us isfurther supported from the judgment of the Delhi High Court inCommissioner of Income-taxvs. Blaxe Advertising (Delhi) Pvt. Ltd.,(2002) 255 I.T.R. 460 in which the Court declined to answer the questionon the ground that the amount involved was only Rs.18,823/-. In view of the above, we decline to answer the questions andaccordingly dispose of the reference. (SATISH KUMAR MITTAL) JUDGE July 03, 2008vkg (RAKESH KUMAR GARG) JUDGE