COMMISSIONER OF INCOME TAX-II, JALANDHAR V. CHARANJIT SINGH KANWAR, THE FORT KARTARPUR, JALANDHAR

ITA/195/2012

AI Insights

The case involves two Income Tax Appeals filed by the Commissioner of Income-tax, Jalandhar, against Sh. Charanjit Singh Kanwar concerning the assessment year 2007-08. The appeals challenged the Tribunal's decision to delete the addition of `27,60,300 made by the Assessing Officer (A.O.) on account of disallowance of expenditure incurred for performing the Akhand Path, which related to earlier years. The main legal contention was whether the Tribunal was correct in law and on facts in deleting this addition despite the A.O. finding specific defects in the receipts issued for the expenditure. The Tribunal and the Commissioner of Income Tax (Appeals) relied on the Supreme Court's judgment in CIT v. Realest & Services Ltd., which emphasized the consistency of the method of accounting unless a change benefits the Revenue.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 743143 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 21-01-2013
• Assessment Year: misc
• Other Referred Cases: CIT v. Realest & Services Ltd. 307 ITR (SC) 202
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: VIVEK SETHI
• Keywords: Disallowance of Expenditure; Income Tax Appeals; Akhand Path; Mixed System of Accounting
• Section: 145; 260-A

Judgement Text

"ITA Nos.195 & 196 of 2012 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: January 21, 2013 1. ITA No.195 of 2012 (O&M) The Commissioner of Income-tax Jalandhar …Appellant Versus Sh. Charanjit Singh Kanwar, the Fort Kartarpur …Respondent 2. ITA No.196 of 2012 (O&M) The Commissioner of Income-tax Jalandhar …Appellant Versus Sh. Charanjit Singh Kanwar, the Fort Kartarpur …Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON’BLE MS. JUSTICE RITU BAHRI Present: Mr. Vivek Sethi, Advocate for the appellant. 1 To be referred to the Reporters or not? 2 Whether the Judgment should be reported in the Digest HEMANT GUPTA, J. This order shall dispose of the above mentioned two Income Tax Appeals filed under Section 260-A of the Income Tax Act, 1961 (for short 'the Act') against the order dated 20.03.2012 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (for short 'the Tribunal') in respect of the assessment year 2007-08 raising the following substantial questions of law: “(i) Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law and on facts ITA Nos.195 & 196 of 2012 -2- deleting the addition of ` 27,60,300/- made by the A.O. on account of disallowance of expenditure incurred for performing the Akhand Path, relating to earlier years when the assessee was following mixed system of accounting whereas according to Section 145 of the Income Tax Act, 1961 the assessee was required to maintain earlier cash method of accounting or mercantile method of accounting, but the assessee was maintaining two systems i.e. mixed system under the some head of business? (ii) Whether on the facts and circumstances of the case, the Hon'ble ITAT was right in law and on facts in deleting the addition of ` 27,60,300 made by the A.O. on account of disallowance of expenditure incurred for performing the Akhand Path holding that no specific defect were found by the A.O. whereas specific defects were duly found i.e. several receipts did not carry any particular remarks i.e. the purpose for which these were issued and the assessee failed to prove that all the receipts issued were for performance of Akhand Path?” The Commissioner of Income Tax (Appeals) as well as the Tribunal have returned the findings of fact relying upon the judgment of Hon'ble the Supreme Court in the case of CIT v. Realest & Services Ltd. 307 ITR (SC) 202 that method of accounting following consistently should not be disturbed because it was incorrect unless it could be shown that change in the method of accounting would result in gain for the Revenue. The Commissioner of Income Tax (Appeals) as well as the Tribunal has recorded finding that no useful purpose will be served by changing the method when net result of excluding the receipts pertaining to paths performed in the earlier years would be ITA Nos.195 & 196 of 2012 -3- reduction of the income of the present assessment year without adding to the income to the same or larger extent in the income for paths booked in the subsequent years. In view of the said finding, we do not find that any substantial question of law arises for consideration by this Court. Dismissed. (HEMANT GUPTA) JUDGE (RITU BAHRI) JUDGE 21.01.2013 Atul/Vimal "