Batra Palace P. Ltd. V. Commissioner of Income Tax, Aayakar Bhawan Rishi Nagar, Ludhiana, Punjab

ITA/76/2010

AI Insights

M/s. Batra Palace P. Ltd. appealed against the order of the Income Tax Appellate Tribunal, Chandigarh, which upheld the additions made by the Assessing Officer to the appellant's income for the assessment year 2005-06. The additions were made on the grounds that the expenditures claimed for hotel building repairs and purchases of linen and curtains were unsubstantiated and the books of accounts were rejected. The High Court dismissed the appeal, stating that the issues raised were questions of fact and did not involve any substantial question of law.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 796988 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 16-02-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: S K MUKHI
• Keywords: Assessment Year 2005-06; Best Judgment Assessment; Bogus Expenditure; Books of account; Expenditure; Income Tax; Nil Income; Scrutiny; Hotel Building Repair
• Section: 143(2); 145; 260-A

Judgement Text

" I.T.A. No. 76 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 76 of 2010 Date of Decision: February 16, 2010 M/s. Batra Palace P. Ltd. ----Appellant Versus Commissioner of Income Tax, Aayakar Bhawan Rishi Nagar, Ludhiana, Punjab. ---Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Mr. S.K. Mukhi, Advocate for the appellant. 1. To be referred to the Reporters or not? 2. Whether the judgment should be reported in the Digest? **** M.M. KUMAR, J. The assessee has approached this Court by invoking Section 260-A of the Income Tax Act, 1961 (for brevity 'the Act') and has challenged order dated 15.05.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench (A) (for brevity 'the Tribunal') rendered in ITA No. 144/Chandi/2009 in respect of the assessment year 2005-06. The assessee has filed his return for the assessment year 2005-06 declaring nil income. However, Assessing Officer selected the return for scrutiny. The assessment was finalized after complying with the procedure laid down under Section 143(2) of the I.T.A. No. 76 of 2010 -2- Act. The assessing Officer made additions of Rs. 21,09,875/-, which was claimed by the assessee to be expenditure of hotel building repair. Another sum of Rs. 4,02,350/- was also added because the Assessing Officer found the expenditure on linen curtains, room supply debited to P & L account as bogus. The assessment framed by the Assessing Officer vide order dated 28.12.2007 was challenged before the CIT(A) who upheld the order of Assessing Officer in rejecting the books of account under Section 145 of the Act and by completing the assessment to the best of his judgment. The CIT(A) found the various cases of expenditure made by the appellant in his books of accounts but subjected to verification, by asking the seller of those items to the appellant. The seller of the appellant, M/s. Tools Traders and M/s. Amit Enterprises, Delhi were sent letters through speed post, which was received back with the postal remarks that 'no such address'. In respect of one M/s. Amar Nath & Co., Delhi from where Bed Cover, Bed Sheet were said to have been purchased, was contacted by the Assessing Officer on telephone. They had denied selling any materials to the appellant nor they have any ledger account in the name of appellant in their books of accounts, this was also confirmed vide letter dated 21.12.2007. Accordingly, likewise communications were received from M/s. Amit Enterprises, Delhi which has been rejected by the Assessing Officer because the letter obviously sent at the instance of the appellant, so information was sent on fresh letter page, which did not even carried telephone numbers nor any account numbers. I.T.A. No. 76 of 2010 -3- The other invoices and bills are also found to be bogus. Accordingly, they claimed expenditure in respect of sum of Rs. 4,02,350/- was found to be bogus. Likewise, amount of Rs. 21,09,875/- as expenses incurred on the repair and maintenance of hotel building was found to be unexplainable, the genuineness of the expenditure could not be verified from the voucher and purchase invoices. The order of CIT(A) has been upheld by the Tribunal which is subject matter of challenge in the instant appeal. Having heard learned counsel for the appellant at a considerable length, we find that the additions have been made after rejecting the books of accounts. These are necessarily findings of fact which would not give rise to any question of law warranting admission of appeal. Whether the building repair and maintenance was actually done by incurring expenditure, whether expenditure was incurred on linen curtains, bed cover etc. would necessarily be questions of fact. We do not find any substantive question of law warranting admission of appeal, accordingly the same is dismissed. (M.M. KUMAR) Judge (JITENDRA CHAUHAN) 16th February, 2010 Judge Atul "