The Commissioner Of Income Tax-Ii, Panchkula v. Shri Rakesh Kumar Khosla

ITA No. 170 of 2014 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 170 of 2014 ANDX-objection No. 47-CII of 2015 (O&M) Date of Decision: 24.8.2015 The Commissioner of Income Tax-II, Panchkula ....Appellant. Versus Shri Rakesh Kumar Khosla, Prop. Khosla Trading Company,Ambala City ...Respondent. CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. Yogesh Putney, Advocate for the appellant. Mr. Sunish Bindlish, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.Delay in filing and refiling the cross-objections is condoned.2.This appeal has been preferred by the revenue underSection 260A of the Income Tax Act, 1961 (in short “the Act”) against theorder dated 26.9.2013 (Annexure A-3) passed by the Income TaxAppellate Tribunal, Chandigarh Bench “A”, Chandigarh (hereinafterreferred to as “the Tribunal”) in ITA No. 556/CHD/2013 for theassessment year 2009-10, claiming the following substantial questionsof law:- I.Whether the Hon'ble ITAT was right in law andin the facts of this case to set-aside the order ofthe CIT(A) and directing the A.O. to make anaddition of ` 2,00,000/- in trading account deleting the addition made by the A.O. byignoring the fact that the A.O. made an additionof ` 41,24,000/- on the ground that theassessee failed to justify the adoption of saleprice at less than opening stock price withdocumentary evidence? II.Whether the Hon'ble ITAT was right in law andin the facts of the case in deleting the additionwhereas the Hon'ble ITAT had itself held thatthere was no justification for selling particularlythe rice DB at much lower price than the closingstock price or opening stock price?in the facts of the case in deleting the additionwhereas the Hon'ble ITAT had itself held thatthere was no justification for selling particularlythe rice DB at much lower price than the closingstock price or opening stock price? 2.The facts, in short, necessary for adjudication of the instantappeal as narrated therein are that the assessee filed his return ofincome on 29.9.2008 for the assessment year 2009-10 declaring anincome of ` 3,79,160/-. The assessment was completed by theAssessing Officer vide order dated 29.12.2011 (Annexure A-1) at anincome of ` 45,03,160/-. The Assessing Officer made an addition of` 41,24,000/- on account of differences in opening stock price and saleprice. Feeling aggrieved, the assessee filed an appeal before theCommissioner of Income Tax (Appeals) [for brevity “the CIT(A)”]. TheCIT(A) vide order dated 3.4.2013 (Annexure A-2) dismissed the appealof the assessee. Being dissatisfied, the assessee filed an appeal beforethe Tribunal who vide order dated 26.9.2013 (Annexure A-3) while partlyallowing the appeal held that the estimated addition of ` 2,00,000/- isrequired to be made and directed the Assessing Officer to make theaddition of ` 2,00,000/- in the trading account. Hence, the present appeal by the revenue. The assessee also filed cross-objectionschallenging the addition of ` 2,00,000/- sustained by the Tribunal. 3.We have heard learned counsel for the parties. 4.Learned counsel for the revenue submitted that the Tribunalwhile partly accepting the appeal of the assessee had directed that intheir opinion the estimated addition of ` 2,00,000/- was required to bemade without giving any basis for the same as against the addition of` 41,24,000/- made by the Assessing Officer. It was also urged that theAssessing Officer had rightly made the addition and he could not haveassessed the sale price at much lower price than the closing stock priceor opening stock price. appeal by the revenue. The assessee also filed cross-objectionschallenging the addition of ` 2,00,000/- sustained by the Tribunal. 3.We have heard learned counsel for the parties. 4.Learned counsel for the revenue submitted that the Tribunalwhile partly accepting the appeal of the assessee had directed that intheir opinion the estimated addition of ` 2,00,000/- was required to bemade without giving any basis for the same as against the addition of` 41,24,000/- made by the Assessing Officer. It was also urged that theAssessing Officer had rightly made the addition and he could not haveassessed the sale price at much lower price than the closing stock priceor opening stock price. 5.On the other hand, learned counsel for the assessee in hiscross-objections had challenged the direction for addition of ` 2,00,000/-sustained by the Tribunal. It was submitted that it was also required tobe seen by the Tribunal as to what would be the effect of the closingstock of this year on the opening stock of the next year. 6.The Assessing Officer made an addition of ` 41,24,000/- onthe ground that the assessee failed to justify the adoption of sale price atless than opening stock price with documentary evidence. Further, theAssessing Officer held the said addition was the only income which theassessee got out of books of account and had not declared in hisreturned income. On appeal by the assessee, the CIT(A) upheld theorder of the Assessing Officer and dismissed the appeal. On furtherappeal by the assessee, the Tribunal held that the Assessing Officercould not have estimated the sale price on the basis of rates of closingstock or some other notional basis without pointing out any defect in thesale price. The Tribunal while partly allowing the appeal of the assessee ITA No. 170 of 2014 -4- had sustained the addition of ` 2,00,000/- in the trading account. Aperusal of para 8 of the order of the Tribunal shows that no legallyjustified reasons have been recorded for arriving at the said conclusion.7.In view of the above, the matter requires to be remanded.Accordingly, the appeal as well as the cross-objections are disposed ofand the order dated 26.9.2013 (Annexure A-3) passed by the Tribunal isset aside. The matter is remitted to the Tribunal to decide the sameafresh on merits in accordance with law. (AJAY KUMAR MITTAL) JUDGE August 24, 2015gbs (RAMENDRA JAIN) JUDGE