Vidya Sagar v. Commissioner Of Income Tax, Karnal

ITA No. 785 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Vidya Sagar Prop. M/s Fine Bricks Versus Commissioner of Income Tax, Karnal ITA No. 785 of 2010 (O&M)Date of Decision: 12.1.2011 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Ravi Shanker, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.Delay in refiling the appeal is condoned. 2.This appeal has been preferred by the assessee underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order dated 19.11.2009 passed by the Income Tax AppellateTribunal, Chandigarh Bench “B”, Chandigarh (hereinafter referred to as“the Tribunal”), in ITA No. 917/CHANDI/ 2009, for the assessment year2003-04, claiming the following substantial questions of law:- “(i)Whether the order of the Income Tax AppellateTribunal is perverse in the eyes of law inallowing the expenditure on purchases of coalfrom three parties but disallowing the same inrespect of fourth party M/s North East CoalTribunal is perverse in the eyes of law inallowing the expenditure on purchases of coalfrom three parties but disallowing the same inrespect of fourth party M/s North East Coal Mining despite the same documentaryevidences having been brought on record bythe appellant in respect of purchases madefrom all the four parties? (ii) Whether the order of the Income Tax AppellateTribunal is perverse in the eyes of law insustaining the disallowance of the expenditureon purchase of coal from M/s North East CoalMining by relying upon the report in respect ofanother earlier assessment year i.e. 2002-03regarding non-traceability of the said party,despite the fact that in that earlier year thepurchases were held to have been made incash and thus not doubting the existence of thesaid party?” 3.The facts necessary for adjudication as mentioned in theinstant appeal are that after setting aside the original assessmentframed on 27.2.2006 by the Commissioner of Income Tax (Appeals) [inshort “the CIT (A)”] the assessment for the year in question wasreframed on 16.10.2008. The Assessing Officer disallowed the entireamount of Rs.9,72,777/- paid on purchases. Feeling aggrieved, theassessee filed an appeal. The CIT(A) sustained the addition to theextent of Rs.3,37,695/- and deleted the balance of Rs.6,35,082/-. Onfurther appeal by the assessee, the Tribunal while partly allowing theappeal deleted the addition on account of purchases except an additionof Rs.1,34,569/- on account of purchases from M/s North East Coal Mining. Hence, the present appeal by the assessee. 4.We have heard learned counsel for the appellant. 5.The point for consideration is regarding the allowance ofexpenditure on purchase of coal from M/s North East Coal Mining. TheAssessing Officer had disallowed by holding that the said party couldnot be traced at the given address. It was also observed that M/s NorthEast Coal Mining was non-existing during the assessment proceedingsrelating to assessment year 2002-03 as well. This finding of theAssessing Officer was upheld by the CIT (A) and affirmed by theTribunal. The Tribunal while upholding the aforesaid disallowance hadrecorded as under:- Mining. Hence, the present appeal by the assessee. 4.We have heard learned counsel for the appellant. 5.The point for consideration is regarding the allowance ofexpenditure on purchase of coal from M/s North East Coal Mining. TheAssessing Officer had disallowed by holding that the said party couldnot be traced at the given address. It was also observed that M/s NorthEast Coal Mining was non-existing during the assessment proceedingsrelating to assessment year 2002-03 as well. This finding of theAssessing Officer was upheld by the CIT (A) and affirmed by theTribunal. The Tribunal while upholding the aforesaid disallowance hadrecorded as under:- “9.We have considered the rival submissions carefully.In this case, the impugned disallowance has beenmade primarily for the reason that during the courseof assessment proceedings for assessment year2002-03, the Assessing Officer conducted enquiriesthrough his counterpart at Gauhati and found that thepurchases of coal effected by the assessee fromcertain parties were not genuine. The Income-taxauthorities at Gauhati reported to the assessingofficer that the parties could not be traced at theaddresses stated. For the above reason, certaindisallowances out of the coal purchases have beenmade by the Assessing Officer in this year also. Outof the four parties in question before us, one of theparties, namely M/s North East Coal Mining was found non-existing during the assessmentproceedings for assessment year 2002-03 by theincome-tax authorities, Gauhati. The Commissionerof Income-tax (A) records that the purchases madefrom the said party has been disallowed in theassessment year 2002-03 also. The Commissionerof Income-tax (A) has sustained a disallowance ofRs.1,34,569/- in this year too, representing coalpurchased from the said party during the year underconsideration. In view of the history culled out by theCommissioner of Income-tax (A) to which there is nocontroversion from the side of the assessee, we findno mistake in the disallowance sustained by theCommissioner of Income-tax (A). The disallowanceof Rs.1,34,569/- stated to be purchases of coaleffected from M/s North East Coal Mining is herebysustained. With regard to other three parties, we find that thesame did not figure in the verification exerciseconducted during the assessment proceedings forthe assessment year 2002-03. Even during the yearunder consideration, the Assessing Officer has notconducted any verification exercise as done in theassessment year 2002-03 with respect to the saidthree parties. Therefore, under such circumstances,the issue relating to the purchases from the three parties in question cannot be decided in the samelight. Ostensibly, the genuineness of purchase madefrom the said three parties is to be made on the basisof the material and the evidence on record. In thislight, we have considered the material referred to bythe assessee in its Paper Book. In this regard, therequisite evidence of transportation is available in thePaper Book. An evidence by way of Inward-Challansissued by Haryana Sales Tax Authorities, whereinthe names of the consignor, being the three parties inquestion is also available on record. Furthermore,the certificate issued by the Sales Tax Authorities inAssam pertaining to the three parties have also beenplaced on record. All these evidences have beenmerely brushed aside by the Assessing Officer andthereafter by the Commissioner of Income-tax (A) onmere presumptions. In the absence of any contraryadverse material on record, in our consideredopinion, the assessee has been successful indischarging the burden cast on it to justify thepurchases from the three parties. We, therefore, findit expedient to delete the addition of Rs.2,03,126/-reflecting the purchases of coal effected from thethree parties, namely M/s Aggarwal Coal Pvt. Ltd.,M/s Signai Ceramics Pvt. Ltd. and M/s BansalAssociates Ltd. ITA No. 785 of 2010 ITA No. 785 of 2010 -6- 11.Accordingly, out of the total addition of Rs.3,37,695/-sustained by the Commissioner of Income-tax (A),we direct the Assessing Officer to delete an additionof Rs.2,03,126/- and retain the addition ofRs.1,34,569/- only.” 6.Learned counsel for the appellant was unable to displacethe aforesaid finding of fact concurrently recorded by the AssessingOfficer, the CIT(A) and the Tribunal. It has not been shown to beperverse in any manner and, therefore, no interference is called for bythis Court. Accordingly, no substantial question of law arises in thisappeal. 7.The appeal stands dismissed. (AJAY KUMAR MITTAL) JUDGE January 12, 2011gbs (ADARSH KUMAR GOEL)JUDGE