Gujarat High Court
Commissioner Of Income Tax-Iii vs M/S I P Patel on 29 January, 2010
Author: Sonia Gokani
Bench: Akil Kureshi, Sonia Gokani
COMMISSIONER OF INCOME TAX-III....Appellant(s)V/SM/S I P PATEL & CO....Opponent(s) O/TAXAP/1546/2010 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 1546 of 2010 ================================================================ COMMISSIONER OF INCOME TAX-III....Appellant(s) Versus M/S I P PATEL & CO....Opponent(s) ================================================================ Appearance: MR SUDHIR M MEHTA, ADVOCATE for the Appellant(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI and HONOURABLE MS JUSTICE SONIA GOKANI 11th February 2013 ORAL ORDER
(PER : HONOURABLE MS JUSTICE SONIA GOKANI) Challenging the order of the Income Tax Appellate Tribunal, Ahmedabad [ Tribunal for short] dated 29th January 2010, the present Tax Appeal is preferred raising following substantial questions of law for our consideration :-
[A] Whether on the facts and in the circumstances of the case and in law, the Appellate Tribunal was right in deleting the addition of Rs. 72,26,952/= despite the fact that it upheld the rejection of books of accounts under section 145 of the I.T Act as the assessee failed to produced qualitative data of stock and production ?
[B] Whether on the facts and in the circumstances of the case the Appellate Tribunal was correct in law in concluding that the book results are apparently bona fide and deleting the addition of Rs. 72,26,952/= after specifically holding that the Assessing Officer was justified in not relying on the final results given by the assessee as the basic records have not been produced before him ?
[C] Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in deleting the addition of Rs. 72,26,952/= in the light of the decision of the Hon ble Supreme Court in the case of Kachwala Gems, 288 ITR 10, where the Hon ble Apex Court clearly held that there is necessarily some amount of guess work involved in a best judgment assessment and is the assessee himself who is to blame as he did not submit proper accounts ?
Heard learned advocate Shri Sudhir Mehta for the Department. For the sake of convenience, all the three questions have been decided together.
The respondent-assessee had filed return of income for the A.Y 2005-06 on 31st October 2005 . On scrutiny assessment, certain additions were made by the Assessing Officer. The Assessing Officer noted that the assessee had not maintained quality-wise data of the diamonds produced by it, and therefore, he rejected the books of accounts under Section 145 of the Income-tax Act, 1961 [ Act for short].
Aggrieved by this, the assessee filed appeal before the CIT [A], who confirmed the additions, and therefore, the assessee-respondent preferred appeal before the Income-tax Appellate Tribunal on both the counts viz., on the issue of estimation of profit and also on the issue of rejection of books of accounts. The Tribunal held against the revenue and in favour of the assessee-respondent, therefore, the present appeal raising the above questions of law.
On examining the material on record, it could be noted that the Tribunal had noted various aspects and concluded in favour of the assessee-respondent. We find from such conclusions that no error had been made which could lead to conclude that there was any perversity in such findings giving rise to the questions of law. The Tribunal noted that as far as additions were made by the Assessing Officer, they are not based on sound logic. If the intention on the part of the assessee was to evade or save the tax, higher production in the export oriented unit could have been shown and thereby it could have claimed exemption on such income. On noticing that the yield in the non-EOU unit is more than the yield in EOU unit and the gross profit rate in non-EOU unit is also more than the gross profit rate in the EOU unit, it did not agree with the proposition of the Assessing Officer that the yield would not vary with the quality of diamonds purchased and the source from where they are extracted. It also noted that there was nothing on the record to indicate that these diamonds were extracted from the same mines, therefore, some variations somewhere were found feasible. Moreover, considering the fine and specialized craftmanship, diamond cutting, polishing, etc., and the possible wastage that may occur on account of expertise of the workers, it found no justification in such additions. We absolutely find no reason to interfere in the findings, which are based on sound reasonings and they are all logically based on the material presented before the Tribunal. No question, in our opinion, arises for our consideration, much less substantial question of law for entertaining this appeal. Resultantly, the present Tax Appeal is dismissed.
(AKIL KURESHI, J.) (Ms. SONIA GOKANI, J.) Prakash* Page 4 of 4