The Commissioner of Income Tax vs Shri C. Jayantilal

F.M. Ibrahim Kalifulla, J.—The Revenue has come forward with this appeal challenging the order of the CIT (Appeals) dated 17.12.2008

passed in I.T.A. No. 1921/Mds/2007 in and by which the order of the CIT (Appeals) dated 25.05.2007 was confirmed.

The questions of law that arise for consideration in this appeal are as under:

[i] Whether on the facts and circumstances of the case, the Tribunal was right in deletion of sum of Rs. 37,71,931/- being the difference in stock

value found?

[ii] Whether on the facts and circumstances of the case, the Tribunal was right in law in holding that the Assessee has discharged burden of proof

cast upon him for Rs. 11,00,000/- being the advance paid for purchase of land especially as the same was not shown in the Trial Balance?

[iii] Whether on the facts and circumstances of the case, the Tribunal is right in not considering the fact that the voluntary statement made without

any coercion or duress nor retracted given could form basis for the Assessment?

As far as the first question of law is concerned, a perusal of the order of the CIT (Appeals) discloses that the Assessing Authority solely relied

upon a letter of the assessee dated 22.03.2005 wherein, the assessee offered a sum of Rs. 20,00,000/- for assessment for the year 2005-2006,

apart from a sum of Rs. 17,71,932/- as stock difference. The CIT (Appeals), after considering the issue, has noted that for arriving at the stock

value at the time of survey, the same was valued based on the selling price, while it is the settled law that the closing stock should be adopted at the

cost price or the market price, whichever is less. It was also found that if it had been worked out on the basis of the cost price or the market price,

the stock deficit of Rs. 17,71,932/- could not have been made.

4.As far as the amount of Rs. 20,00,000/- offered by the assessee in the letter dated 22.03.2005 is concerned, the CIT (Appeals), had relied

upon the decisions reported in (1995) 54 ITD 116 and (2002) ITR (AT) 69 wherein, it was held that taxation was not based on the agreement

between the tax-payer and the Revenue and is levied based on the income supported by evidence. The CIT (Appeals) also noted that in respect of

a sum of Rs. 20,00,000/- offered, except the ipse dixit statement contained in the letter dated 22.03.2005, there was no supporting material

evidence to establish that there was really any stock deficiency to the tune of the said value. It was on the above said reasoning, the deletion of a

sum of Rs. 37,71,931/- came to be made by the CIT (Appeals). As far as the sum of Rs. 11,00,000/- which was one other discrepancy noted at

the time of survey is concerned, the explanation of the assessee was that the said sum was received from one Mr. Chellappan as advance for the

sale of agricultural lands. In support of the said stand, the assessee produced certain documents which related to the sale of agricultural lands stood

in the names of J. Rakesh and J. Meena in favour of Mr. Chellappan. The receipt of the said sum was stated to have been shown in the list of trade

creditors for which the explanation offered was that the same came to be made due to lack of accounting knowledge. One other material in

support of the said stand was the statement of Mr. Chellappan himself, which was produced before the Assessing Authority, which has been noted

by the Assessing Authority at page No. 7 of his order.

As rightly pointed out by the CIT (Appeals), none of the above factors placed before the Assessing Authority were doubted by the Assessing

Authority. In fact, it was pointed out that if Mr. Chellappan''s statement had been doubted by the Assessing Authority, it should have summoned

him and put to necessary cross-examination to unearth the truth. It was, therefore, held that in the absence of any such exercise, the explanation

offered by the assessee ought to have been accepted. The above reasoning of the CIT (Appeals), in respect of the sum of Rs. 11,00,000/- and its

deletion, was perfectly in order. In any case, the findings of the CIT (Appeals) on the above two items and its deletion, were based on a detailed

consideration of relevant factors and in any event, such conclusions were out and out concerning the factual matrix of the case and we do not find

any irregularity or illegality in the above conclusion reached by the CIT (Appeals), which was simply confirmed by the Tribunal, in its order dated

17.12.2008.

When we pursued the impugned order of the Tribunal, we find that the Tribunal has simply made a statement to the effect that the CIT

(Appeals) recorded ample reasons for deleting various disallowance''s and that the reliefs were granted only based on valid grounds explained by

the assessee, and therefore, there was no necessity to disturb the order of the CIT (Appeals). In this context, we only wish to refer to the following

two decisions of the Hon''ble Supreme Court, viz., [i] Udhavdas Kewalram Vs. Commissioner of Income Tax, Bombay City I, and [ii] Basti Sugar

Mills Co. Ltd. and Others Vs. Commissioner of Income Tax, Delhi and Rajasthan, , wherein it has been stated as under and leave it at that.

[i] Udhavdas Kewalram Vs. Commissioner of Income Tax, Bombay City I,

The Income Tax Appellate Tribunal performs a judicial function under the Indian-tax Act: it is invested with authority to determine finally all

questions of fact. The Tribunal must, in deciding an appeal, consider with due care all the material facts and record its finding on all the contentions

raised by the assessee and the Commissioner in the light of the evidence and the relevant law.

[ii] Basti Sugar Mills Co. Ltd. and Others Vs. Commissioner of Income Tax, Delhi and Rajasthan, .

As laid down by this Court in Udhavdas Kewalram v. Commissioner of Income Tax, the Income Tax Appellate Tribunal has to act judicially in the

sense that it has to consider with due care all material facts and the evidence

F.M. Ibrahim Kalifulla, J.

and

B. Rajendran, J.

[gs/rns]

in favour of and against the assessee and record its finding on all the contentions raised by the assessee and the Commissioner in the light of the

evidence and the relevant law. From the discussion contained above it is clear that it cannot be said that the Appellate Tribunal in the case before

us has omitted to consider any material fact or any material piece of evidence.

In such circumstances, the questions of law raised cannot be considered in this appeal, inasmuch as there is no question of law, much less a

substantial question of law. The appeal fails and the same is dismissed. No costs.