Madras High Court
The Commissioner Of Income Tax vs J.Dinesh Mehta on 5 July, 2018
Author: M.M.Sundresh
Bench: M.M.Sundresh, N.Anand Venkatesh
In the High Court of Judicature at Madras Dated: 05.07.2018 Coram The Honourable Mr.JUSTICE M.M.SUNDRESH and The Honourable Mr.JUSTICE N.ANAND VENKATESH Tax Case (Appeal) No.84 of 2010 The Commissioner of Income Tax, Madurai ... Appellant Vs. J.Dinesh Mehta, 27, Sivan Sannathi, Karaikudi. ... Respondent Appeal under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'D' Bench, Chennai, dated 10.07.2009 in IT(S.S.)A.No.107/Mds/2007 for the assessment period 01.04.1996 to 29.01.2003. For Appellant : Mr.T.R.Senthil Kumar, Senior Standing Counsel, Asst. by Mrs.K.G.Usha Rani For Respondent : Mr.A.S.Sriraman for Mr.S.Sridhar JUDGMENT
(Judgment of the Court was delivered by M.M.SUNDRESH, J.) This Tax Case (Appeal) has been filed by the Revenue challenging the order passed by the Commissioner of Income Tax (Appeals) viz., the Appellate Authority as confirmed by the Income-tax Appellate Tribunal "D" Bench, Chennai, dated 10.07.2009 in IT(S.S.)A.No.107/Mds/2007 for the assessment period 01.04.1996 to 29.01.2003.
2. This tax case (appeal) has been admitted on the following substantial question of law:-
"1.Whether on the facts and in the circumstances of the case, the Tribunal was correct in holding that the additions made on the basis of seized pocket diaries is to be deleted?
2.Whether the statements recorded under Section 132(4) pertaining to entries found recorded in note books found in the possession of Pathars seized could be used as evidence in the income tax proceedings.
3. The assessee is a Firm doing Jewellery business under the name and style of M/s Jaswant Singh & Sons (in his individual capacity) and M/s Gems Palace (in his HUF status). A survey under Section 133-A of the Act was conducted followed by search on the office and the residence of the assessee. No undisclosed asset was found from the premises of the assessee. However, search was made in the premises of Pathers, who are stated to be the job workers, from the diaries maintained by them, in which, entries were stated to have been made by the assessee. Additions were made through block assessment. The statements were also taken by them in tune thereon. The Commissioner of Income Tax(Appeals) allowed the appeal by taking note of the subsequent sworn statements of Pathers, by which, the assessee was permitted to cross examine holding that the statement made being contradictory and they also indicated the factum of being job services to other jewellers similarly placed assessee, the order of assessing Officer cannot be sustained in the eye of law. Incidentally, it was held that in the absence of any corroborative evidence to substantiate the diaries even assuming they are true notwithstanding the denial made by the assessee, the additions cannot be sustained. Challenging the same, the Revenue field the appeal. The Tribunal was also pleased to hold that there is no sufficient material to sustain the assessment made. There was no unamended purchases and sales found are deducted during search of the assessee. Inasmuch as the assessee had denied the handwriting and the Assessing Officer did not send it to the Handwriting Expert, it would not safe to rely upon them. The Pathers are not employees of the assessee. Therefore, they being independent job workers, their earlier statement cannot be taken as the gospel truth, especially in the light of the statements given contradicting the earlier one. Challenging the same, the present appeal has been filed.
4. The learned Standing Counsel appearing for the Revenue would submit that both the Commissioner of Income Tax (Appeals) and Income Tax Appellate Tribunal committed an error in not taking into consideration presumption under Section 134-A of the Act. The assessee did admit that some of the entries were made by him. Thus, the questions of law arrived will have to be answered in favour of the assessee.
5. The learned counsel appearing for the assessee would submit that there was no admission as alleged. The admission is with respect to the transactions and not the entries made in the diaries. In other words, the handwriting in the entries were denied. Admittedly nothing incriminating was recovered from the assessee in pursuant to the search made both in the firm and the residence. Hence, the appeal has to be dismissed.
6. Section 132(4A) merely creates a presumption. Therefore, in the absence of any material to substantiate the said presumption and in the light of the finding rendered by both the Appellate Authority and Tribunal, we do not find any substantial questions of law involved. Admittedly, nothing has been seized from the premises of the assessee. The statements made by the Pathers being independent job workers were found to be contradictory. There was no admission by the assessee. The admission was with respect to the some of the transactions between the assessee and the Pathers and not with respect to the entries made in the diaries. The Pathers were also doing job work of others as seen from their statements. Therefore, we are of the view that it cannot be stated that they are employees of the assessee. In any case, what has been done by the Commissioner of Income Tax (Appeals) as confirmed by the Tribunal, is on appreciation of fact. Thus, we do not find any reason to interfere with the findings of the Tribunal. In such view of the matter, the decision relied upon by the learned counsel appearing for the Revenue in COMMISSIONER OF INCOME-TAX VS. AMBIKA APPALAM DEPOT ((2012) 340 ITR 497) has got no application to the case on hand as in the abovesaid case, the Court did find corroborative evidence to substantiate along with the presumption created under Section 132(4-A) of the Act. After all the presumption under the abovesaid provision is rebuttable in nature. Accordingly, we do not find any substantial questions of law involved and the tax case appeal stands dismissed. No costs.
(M.M.S.,J.) (N.A.V.,J.)
05.07.2018
Index:Yes/No
raa
To
1.The Deputy Commissioner of Income Tax, CentralCircle-II, Madurai.
2.The Commissioner of Income TAX (Appeals-II), Madurai.
3.The Income Tax Appellate Tribunal, Bench 'D', Chennai.
M.M.SUNDRESH, J.
and
N.ANAND VENKATESH,J.
raa
T.C.(A) No.84 of 2010
05.07.2018