THE COMMISSIONER OF INCOME TAX V. M/S GARG ENTERPRISES

ITC/15/1999

AI Insights

The case involves the Commissioner of Income-Tax, Patiala as the appellant and M/s Garg Enterprises as the respondent. The dispute centered on the cancellation of an assessment order by the CIT under Section 263 of the Income Tax Act, which was contested by the assessee, Garg Enterprises. The CIT's cancellation was based on the requirement of confirmation from the concerned party before allowing the benefit of Rule 6DD(j) as per CBDT's circular No. 220 dated 31.5.1977. However, the ITAT reversed the CIT's decision, finding that the necessary confirmations had been provided and the cash payments were justified. The High Court, upon reviewing the case, agreed with the ITAT's findings and dismissed the appeal, stating that no question of law arose.

• Counselvise Citation: [2009] 140 COUNSELVISE.COM (IT) 682822 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 09-11-2009
• Assessment Year: misc
• Other Referred Cases: CIT v. Brij Mohan Singh & Co. 209 ITR 753
• Laws Referred To: Income-tax Act, Rule 6 DD (j) of the Income-tax Rules, 1962, CBDT's circular No. 220 dated 31.5.1977
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: ANIMESH SHARMA
• Assessee Lawyers: URVASHI DHUGGAL
• Keywords: Agricultural Implements; Assessment; Cash payment; Income Tax; Cancellation of Order
• Section: 263; 40A(3)

Judgement Text

"ITC No. 15 of 1999 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITC No. 15 of 1999(O&M) Date of decision: November 9, 2009 The Commissioner of Income-Tax, Patiala ...Appellants Versus M/s Garg Enterprises ...Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present: Ms. Urvashi Dhuggal, Advocate, for the revenue. Mr. Animesh Sharma, Advocate, for the assessee. ORDER 1. This application has been filed for direction to make reference on question of law to the following effect:- “Whether on the facts and in the circumstances of the case, the I.T.A.T. was right in law in holding that the CIT was not justified in cancelling the order passed by the A.O. by invoking the provisions of Section 263 and thereby reversing the order passed by the C.I.T.?” 2. The assessee is engaged in sale and purchase of tractors and its spare parts, mainly required by agriculture sector. The Assessing Officer made assessment for the year in question but thereafter CIT exercising powers under Section 263 of the Act set aside the order of the Assessing Officer on the ground that as per CBDT's circular No. 220 dated 31.5.1977 confirmation of concern party was required before benefit of Rule 6 DD (j) ITC No. 15 of 1999 2 was allowed. On appeal of the assessee before the Tribunal, the said order was set aside after recording a finding that necessary confirmation from the party had been duly furnished and allowing of cash payment was justified. 3. We have heard learned counsel for the parties and perused the record. 4. The relevant observations of the Tribunal are as follows:- “...Neither the AO nor the CIT has doubted the sales of the assessee and there can be no sales if there are no corresponding purchases. The Hon'ble Punjab and Haryana High Court in the case of CIT v. Brij Mohan Singh & Co. 209 ITR 753 has held that section 40A (3) of the Act must not be read in isolation or to the exclusion of rule 6DD of the Income-tax Rules, 1962 and the Circular itself states that the circumstances narrated in paragraph 4 of the circular are not exhaustive but are illustrative and there could be cases other than those falling within the above categories, which would also meet the requirements of rule 6DD (j). Thus, it is seen that the cash payments made by the assessee were covered by rule 6DD (j) read with Board's circular No. 220 dated 30-5-1977 as certified by the Chartered Accountant given alongwith the audit report and the AO had made necessary enquiries in this regard before making the assessment and necessary confirmation were supplied to the AO from parties who were supplying agricultural implements and have no bank account as to whom cash payments were made...” 5. It is clear from the above observations that the Assessing ITC No. 15 of 1999 3 Officer had made necessary inquiries and confirmations were furnished to the Assessing Officer from the parties who were supplying agricultural implements and had no bank account. 6. In view of the above, no question of law arises. 7. Dismissed. (ADARSH KUMAR GOEL) JUDGE November 9, 2009 (GURDEV SINGH ) prem JUDGE "