Punjab-Haryana High Court
Cit vs Bhagwat Parsad Bansal And Sons on 18 January, 2005
Author: Viney Mittal
Bench: Viney Mittal
JUDGMENT G.S. Singhvi, J.
1. In this appeal, the appellant has prayed for determination of the following question of law:
(1) Whether the Income Tax Appellate Tribunal was right in law in ignoring the facts on the record and in confirming the decision of the Commissioner (Appeals) directing to delete the addition of Rs. 3,72,198 made by the assessing officer on account of shortage of stock detected at the time of survey under Section 133A(1) by treating the same as stock sold outside the regular books of account, especially when the assessee could not reconcile the difference in the value of stock at the time of survey or during assessment ?
2. The respondent is a partnership firm. It is engaged in the business of sale and purchase of gold and silver ornaments. On September 14, 1996, a survey was conducted at its business premises under Section 133A of the Income Tax Act, 1961 (for short, "the Act") and some difference was found in the stock. In the course of the survey, the statement of Shri Suresh Bansal, one of the partners of the respondent, was recorded. He stated that the difference in the stock was due to the fact that the ornaments were given to the karigars for washing. The respondent filed a return for the assessment year 1997-98 declaring a loss of Rs. 44,870. The assessing officer completed the assessment under Section 143(3) of the Act and made an addition of Rs. 3,72,198 by taking into consideration the notional profit on the stock of gold and silver jewellery found short at the time of survey. He did not agree with the respondent that the gold and silver ornaments were taken home and held that it had failed to prove that the jewellery or ornaments were given to the karigars or that the same were taken home.
3. The Commissioner (Appeals), Shimla (Camp at Panchkula) (for short, "the Commissioner (Appeals)", allowed the appeal filed by the respondent and deleted the addition made by the assessing officer by rmaking the following observations:
The background of the case clearly shows that the only reason for making the impugned addition was difference in the stand taken by the appellant at the time of survey and before the assessing officer at the time of assessment. The same could not be of any serious consequences unless the assessing officer had himself found discrepancies in the books or found instances of sales outside the books of account even at the time of survey. There was no record kept for handing over the goods to karigars only because the same were available at home where they had been kept for safe custody as is usual practice in the trade namely that the material is taken home in the evening and next day, depending upon the requirement, the goods are brought back. Since on the day of the survey no sales had to take place, the same were not requisitioned from home. The survey party did not record a single item showing sale of material outside the books. The sales tax authorities also accepted the declared sales. The books were accepted by the assessing officer and so was the closing stock position as no purchases put the assessing officer and so was the closing stock position as no purchases outside the books were found which could inflate the stock at the end. Under these circumstances there was no justification for making any addition for profit on suppressed sales as there were no such sales.
4. The Income Tax Appellate Tribunal, Delhi Bench "SMC-1", Delhi (for short, "the Tribunal"'), confirmed the appellate order and dismissed the appeal filed by the appellant.
5. Shri Rajesh Bindal, learned Counsel for the appellant argued that the orders passed by the Commissioner (Appeals) and the Tribunal should be declared as vitiated by an error of law because while deleting the addition made by the assessing officer, the Commissioner (Appeals) ignored the apparent discrepancy in the statement made by Shri Suresh Bansal in the course of survey proceedings and the stand taken by the respondent at the time of assessment. Shri Bindal pointed out that while Shri Suresh Bansal, in his statement made at the time of survey, stated that the ornaments were given by the karigars for washing, the stand taken in the assessment proceedings was that the ornaments had been taken home, but no evidence was produced to prove the same and in that view of the matter, the assessing officer had rightly made addition by calculating the notional profit on the total stock of the gold and silver jewellery.
6. We have considered the submissions of learned Counsel, but have not felt persuaded to agree with him. Rather, we are convinced that no substantial question of law arises for determination in this appeal. The ambit and scope of Section 260A of the Act was considered by one of us (G. S. Singhvi J.) in CIT v. Ms. Monica Oswal , before whom the matter was placed in view of the difference of opinion among the members of the Division Bench which had heard the appeal filed by the revenue. After noticing the provisions of Section 260A of the Act, Section 100 of the Code of Civil Procedure and the judgment$ of the Supreme Court in Panchugopal Barua v. Umesh Chandra Goswami ; Ram Prasad Rajak v. Nand Kumar and Bros. (19981 6 SCC 748 ; Kondiba Dagadu Kadam v. Savitribai Sopan Gujar ; Hari Singh v. Kanhaiya Lal (19991 7 SCC 288 and Santhosh Hazari v. Purushottam Tiwari (SQ, the court culled out the following principles (page 338):
"(a) An appeal under Section 260A of the Act cannot be entertained unless a substantial question of law arises for consideration by the High Court.
(b) To be substantial, a question of law must be debatable and must have a material bearing on the decision of the case and the rights of the parties. Where a question of law is fairly arguable or where there is a difference of opinion on the question of law, the same has to be treated as~a substantial question of law.
(c) A point of law which admits of no two opinions may be a proposition of law but cannot be treated as a substantial question of law.
(d) If the question raised in the appeal is already settled by the highest court of the country or the jurisdictional High Court, then the same cannot be regarded as a substantial question of law. Similarly, if the general principles to be applied in determining the question are well settled and the only issue relates to application of those principles to the particular facts of the case, then no substantial question of law can be said to arise in the appeal.
(e) If the conclusions recorded by the Tribunal in the particular facts of the case are plausible, then it would not be a case of substantial question of law.
(f) The finding of fact recorded by the assessing officer or the first appellate authority or the Tribunal cannot be disturbed by the High Court in exercise of powers under Section 260A of the Act unless such finding is perverse or is such which no person of reasonable prudence could arrive at in the given facts of the case.
7. The facts of the present case show that the Commissioner (Appeals) set aside the addition made by the assessing officer on the ground that no discrepancy had been found in the books of account and there was no evidence of sale having been made outside the books of account and that the discrepancy in the statement made in the course of survey and the assessment proceedings was inconsequential. The Commissioner (Appeals) also took cognisance of the fact that the respondent had not kept record for handing over the ornaments to the karigars only because the same had been kept at home for safe custody as is usual practice in the trade. He also noted that on the day of survey, no sale had to take place and, therefore, the goods were not requisitioned from the house. The Tribunal agreed with the Commissioner (Appeals) and held that there was no justification to make addition to the income of the respondent. In our opinion, the reasons assigned by the Commissioner (Appeals) for setting aside the addition made by the assessing officer are quite plausible and the Tribunal did not commit any error by confirming the appellate order. As a corollary to this, we hold that the orders passed by the Commissioner (Appeals) and the Tribunal do not give rise to a question of law, much less a substantial question of law within the meaning of Section 260A of the Act. Consequently, the appeal is dismissed.