INCOME TAX OFFICER V. M/S SHIV NARAIN RAM KUMAR

ITA/73/1999

AI Insights

The case revolves around an appeal by the Income Tax Officer, Narnaul, challenging the order of the Income Tax Appellate Tribunal, which had deleted additions made to the income of M/s Shiv Narain Ram Kumar based on entries in a diary. The Assessing Officer and the Commissioner of Income Tax (Appeals) had initially relied on these entries to make additions to the assessee's income. However, the Tribunal found that the explanations provided by the assessee for these entries were satisfactory and not controverted by the revenue, leading to the deletion of the additions. The High Court, upon reviewing the matter, upheld the Tribunal's decision, emphasizing that the Tribunal's findings were based on factual appreciation and did not involve any substantial question of law.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 733873 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 29-10-2013
• Assessment Year: misc
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ALOK MITTAL
• Assessee Lawyers: INDERPREET SINGH
• Keywords: Assessing Officer; Commissioner of Income Tax (Appeals); Diary entries; Income Tax; Income tax appellate tribunal; Tribunal

Judgement Text

"ITA No.73 of 1999 [ 1 ] IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.73 of 1999 Decided on: 29.10.2013 Income Tax Officer, Narnaul ..... Appellant VERSUS M/s Shiv Narain Ram Kumar, Nai Mandi, Narnaul ..... Respondent CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON Present: Mr.Inderpreet Singh, Advocate, for the appellant. Mr.Alok Mittal, Advocate, for the respondent. ******* RAJIVE BHALLA, J. (ORAL) The revenue is before us challenging order dated 30.11.1998, passed by the Income Tax Appellate Tribunal, Delhi Bench 'B', New Delhi (hereinafter referred to as the 'Tribunal'). The following question of law was framed while admitting the appeal: - “Whether in the facts and circumstances of the case, the deletion made by the Income-tax Appellate Tribunal from the additions made by the Assessing Authority can be legally sustained despite the fact that the Tribunal has not considered the various entries made in the diary maintained by Shri Sandeep Kumar in the light of the findings recorded by the Commissioner of Income-tax (Appeals)?” ITA No.73 of 1999 [ 2 ] Counsel for the revenue submits that the Tribunal has wrongly held that entries in the diary could not be considered as the explanation offered by the assessee has not been rebutted. It is further submitted that deletion made by the Tribunal of additions made by the Assessing Officer, duly affirmed by the Commissioner of Income Tax (Appeals), Faridabad (hereinafter referred to as the 'CIT(A)') are legally flawed as it was for the assessee to offer a satisfactory explanation as to the source of its finance for purchase of items referred to in the diary. Counsel for the assessee submits that as question framed by the revenue is based upon a factual appreciation of entries in the diary, no question of law much less a substantial question of law arises for adjudication. It is further submitted that the Tribunal has recorded a clear finding that revenue was unable to controvert entries in the diary, the Tribunal has rightly accepted entries which were explained by the assessee. We have heard counsel for the parties, perused the impugned order as well as the orders passed by the CIT(A) and the Assessing Officer. During survey proceedings, the revenue came across a diary allegedly maintained by the assessee. The Assessing Officer as well as the CIT(A) relied upon entries in the diary to make additions to the income of the assessee. The Tribunal has modified these ITA No.73 of 1999 [ 3 ] orders and granted relief to the assessee of Rs.1,96,107/-, by holding as follows: - “22. The question of computing the income based on the entries made in the diary would now arise. We have perused the photo-copies of certain pages of the diary produced before us during the course of hearing. We find that the various entries recorded in the diary relates to the period from 9th May 1987 to 31st March, 1988 in respect of purchases and sales of empty bags, seeds, grease and diesel. The assessee has given detailed explanation about the entries recorded on each page of the diary in its letter dated 25th October 1993 placed at page 132 to 145 of the paper book and having gone through the explanation given about each entry recorded in the diary, we are satisfied that the said entries pertain to purchase and sale of empty gunny bags, seeds, grease, and diesel. The details of such entries are given at pages 152 to 161 of the paper book. The department has not disputed or controverted the details given and explanation offered about each entry. As per the details there are sales shown of empty gunny bags of Rs.48,458/-, sale of seeds of Rs.26,563/-, sale of grease at Rs.1,256/-, sale of diesel at Rs.10,810/-. The assessee has prepared the trading accounts of each commodity dealt in and as per trading accounts the gross profit from such transaction recorded in the diary works out to Rs.10,632.50 as per details below: - Grease account 211 Diesel account 215 Seed account 1148 Empty bag account 9058 We also find from the explanation given at page 130 to 145, that the investment made in the business claimed to ITA No.73 of 1999 [ 4 ] be of Sandeep Kumar has been shown at Rs.15,101/-. There is however, neither any explanation offered nor any evidence produced about the source of such investment in the business. It is rather claimed that this amount was personal savings of Sandeep Kumar but there is no evidence led to establish that he had in his possession Rs.15,101/- out of savings. Having regard to all the facts and circumstances discussed, it would be fair and reasonable if an addition to the extent of Rs.26,000/- is made in the case of the assessee firm on account of transactions recorded in the diary comprising both of profit and investment made therein. The assessee firm would, thus, get a relief of Rs.1,96,107/- In the result, assessee's appeal stands partly allowed.” A perusal of the aforesaid extract would reveal that the assessee gave a written explanation about entries recorded on each page of the diary. After appraisal of the explanation, dated 25.10.1993, the Tribunal has recorded a finding of fact that the department has not disputed or controverted the explanation offered for each entry. The Tribunal, therefore, proceeded to delete additions made with respect to entries that were duly explained by the assessee but rejected additions relating to entries that were not explained. We find no error in the impugned order as it was for the revenue to controvert the explanation. The Assessing Officer as well as the CIT (A) apparently ignored the explanation offered by the assessee. The findings of the fact recorded by the Tribunal do not give rise to a question of law much less a substantial question of law particularly ITA No.73 of 1999 [ 5 ] when the Tribunal has decided the matter after appraising contents of the diary, the explanation offered and by recording pure findings of fact. Dismissed. [ RAJIVE BHALLA ] JUDGE 29.10.2013 [ DR. BHARAT BHUSHAN PARSOON ] shamsher JUDGE Singh Shemsher 2013.11.12 15:53 I attest to the accuracy and integrity of this document Chandigarh "