VIPAN KHANNA V. CIT BATHINDA AND ANR.

ITA/394/2010

AI Insights

The case involves Vipan Khanna, a carriage contractor, who appealed against the order of the Income Tax Appellate Tribunal, Amritsar, concerning the assessment year 2001-02. The primary contention was regarding the alleged inflation or bogus nature of expenses claimed by Khanna in the execution of contracts. The Assessing Officer and CIT(A) had upheld the additions made to the income, which Khanna contested. The Tribunal initially remanded the matter to CIT(A) for a detailed examination of the documents provided by Khanna, which were deemed insufficient to verify the genuineness of the expenses. Upon finding the CIT(A)'s examination inadequate, the Tribunal again remanded the matter for a fresh decision. The High Court upheld the Tribunal's decision, emphasizing the need for a thorough investigation into the genuineness of the documents and the applicability of Section 40-A(3) of the Income Tax Act, 1961.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 746372 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 26-08-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: AKSHAY BHAN
• Keywords: Assessment Year 2001-02; Income Tax; Mercantile system of accounting; Remand order; Genuineness of Documents
• Section: 40(A)(3); 260-A

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.394 of 2010 Date of decision: 26.8.2010 Shri Vipan Khanna. -----Appellant. Vs. Commissioner of Income Tax & another. -----Respondents CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Akshay Bhan, Advocate for the appellant. --- ADARSH KUMAR GOEL, J. 1. This appeal has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 against the order dated 24.7.2009 in I.T.A. No.258/ASR/2009 passed by the Income Tax Appellate Tribunal, Amritsar for the assessment year 2001-02, proposing to raise following substantial questions of law:- “i) Whether in the facts and circumstances of the present case, the ld. ITAT has erred in concluding that the CIT had not verified the genuineness of the documents supplied by the appellant, when the CIT had in detail examined the same? ii) Whether in the facts and circumstances of the present case, the ld. ITAT has erred in ignoring the I.T.A. No.394 of 2010 fact that the appellant assessee was following a mercantile system of accounting? iii) Whether in the facts and circumstances of the present case, the ld. ITAT has erred in remanding to the CIT an issue which was not a part of the remand order and had never been agitated? iv) Whether in the facts and circumstances of the present case, the ld. ITAT has erred in remanding the entire matter to the CIT for fresh consideration? 3. The assessee is a carriage contractor and claimed expenses in the course of execution of the contract. The Assessing Officer held the expenses to be inflated or bogus and made additions, which was upheld by the CIT(A). On further appeal to the Tribunal, reliance was placed on certain documents and on consideration thereof, it was thought proper to remand the matter to the CIT(A). Since the CIT(A) failed to deal with the matter in terms of order of remand, the Tribunal once again remanded the matter for fresh decision. The Tribunal held as under:- “13. We have heard both the parties and perused material on record. In this case, originally, this was set-aside to the file of CIT(A) by the Tribunal vide order dated (supra) for fresh consideration on the reason that the documents produced by the assessee does not inspire confidence, inasmuch as, having gone through it. Further, even the vouchers filed by the assessee do not seem to be of much value. 2 I.T.A. No.394 of 2010 These vouchers did not contain the complete details of the payees or even the truck number. The main purpose of set aside to carry out the examination relating to the genuineness of the payment vouchers and appraisal of the contract agreement. In the course of set aside proceedings, the CIT(A) has not carried out the enquiry in the true perspective. The CIT(A) given the finding that the assessee providing details of 287 trucks supplied to army authorities alongwith truck no., names of drivers, date of unloading, licence no. of the drivers and the items carried with quantity. The question involved is not these details. The question is genuineness of these details. The CIT(A) requires to go beyond the documents to find out the real intention of the parties. Usually, one will proceed on the basis of professed intention, but if that is under doubt or disputed or challenged, then one has to find out the real intention of the parties by ignoring the apparent has to be, and has always been conceded. The CIT(A) actually required to see whether it is a make believe arrangement or dubious or colourable device for adopted by the assessee. The CIT(A) is required to expose the real intention of the party and if the intention is discovered as genuine, then it should be given effect otherwise if it is discovered to be the means to evade the tax, it cannot be acted upon. The assessee is free to prepare the vouchers and account the same in the books of account, but the authority concerned should examine it properly when the issue is challenged before the higher authorities. The Ld. CIT(A) appeal cannot remain passive in the fact of documents filed by the assessee, which is apparently 3 I.T.A. No.394 of 2010 in order but call for further enquiry. It is the duty of the CIT(A) to ascertain truth of the facts of the case stated by the assessee when the circumstances of the case are such as to provoke an enquiry. As in this case, the Tribunal on first occasion directed the Ld. CIT(A) to carry out fresh examination. It is incumbent on the part of the ld. CIT(A) to investigate the facts stated in the various documents produced by the assessee when the circumstances would make such an enquiry prudent. The order of the Ld. CIT(A) is incorrect because such enquiry has not been made and the ld. CIT(A) is not justified in passing order without making any enquiry regarding correctness of the documents filed by the assessee. Accordingly, the issue is set aside to the file of CIT(A) for fresh examination. In the present case, the CIT(A) not passed the order in accordance with the directions given by the Tribunal in its order dated 11th August, 2006. Hence, we set aside the entire issue to the file of CIT(A) considered the entire issue fresh and at this stage refrain from going into the merit of other grounds. The other grounds also require to be examined by the CIT(A) afresh since these are relating to freight payable, which issue was also set aside on earlier occasion.” 4. We have heard learned counsel for the appellant. 5. Learned counsel for the appellant states that the matter was earlier remanded and repeated remand, particularly in relation to applicability of Section 40-A(3) of the Act, was not called for. 4 I.T.A. No.394 of 2010 6. We are unable to accept the submission. The Tribunal has held that genuineness of the documents relied upon by the appellant was required to be gone into by the CIT(A) properly and was not gone into in terms of the earlier remand order. The issue of applicability of Section 40-A(3) of the Act is an inter-connected issue. In the circumstances, the Tribunal had the justification to remand the matter and no prejudice has been caused to the assessee by the said order. 7. No substantial question of law arises. 8. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 26, 2010 ( AJAY KUMAR MITTAL ) ashwani JUDGE 5 "