Vidya Sagar Prop. M/s Fine Bricks V. Commissioner of Income Tax, Karnal

ITA/785/2010

AI Insights

The case involves an appeal by Vidya Sagar, proprietor of M/s Fine Bricks, against the Commissioner of Income Tax, Karnal, concerning the disallowance of expenditure on coal purchases for the assessment year 2003-04. The primary contention was the differential treatment of four coal suppliers by the tax authorities, where purchases from one supplier, M/s North East Coal Mining, were disallowed despite similar documentary evidence for all four suppliers. The Tribunal and lower authorities had previously disallowed the expenditure on the grounds that M/s North East Coal Mining could not be traced and was non-existent during earlier assessments. The High Court upheld these findings, leading to the dismissal of the appeal.

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 796471 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 12-01-2011
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: RAVI SHANKER
• Keywords: Assessment year 2003-04; Disallowance of Expenditure; Income Tax; Perversion of Law; Coal Purchases
• Section: 260A

Judgement Text

"ITA No. 785 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 785 of 2010 (O&M) Date of Decision: 12.1.2011 Vidya Sagar Prop. M/s Fine Bricks ....Appellant. Versus Commissioner of Income Tax, Karnal ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Ravi Shanker, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. Delay in refiling the appeal is condoned. 2. This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 19.11.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafter referred to as “the Tribunal”), in ITA No. 917/CHANDI/ 2009, for the assessment year 2003-04, claiming the following substantial questions of law:- “(i) Whether the order of the Income Tax Appellate Tribunal is perverse in the eyes of law in allowing the expenditure on purchases of coal from three parties but disallowing the same in respect of fourth party M/s North East Coal ITA No. 785 of 2010 -2- Mining despite the same documentary evidences having been brought on record by the appellant in respect of purchases made from all the four parties? (ii) Whether the order of the Income Tax Appellate Tribunal is perverse in the eyes of law in sustaining the disallowance of the expenditure on purchase of coal from M/s North East Coal Mining by relying upon the report in respect of another earlier assessment year i.e. 2002-03 regarding non-traceability of the said party, despite the fact that in that earlier year the purchases were held to have been made in cash and thus not doubting the existence of the said party?” 3. The facts necessary for adjudication as mentioned in the instant appeal are that after setting aside the original assessment framed on 27.2.2006 by the Commissioner of Income Tax (Appeals) [in short “the CIT (A)”] the assessment for the year in question was reframed on 16.10.2008. The Assessing Officer disallowed the entire amount of Rs.9,72,777/- paid on purchases. Feeling aggrieved, the assessee filed an appeal. The CIT(A) sustained the addition to the extent of Rs.3,37,695/- and deleted the balance of Rs.6,35,082/-. On further appeal by the assessee, the Tribunal while partly allowing the appeal deleted the addition on account of purchases except an addition of Rs.1,34,569/- on account of purchases from M/s North East Coal ITA No. 785 of 2010 -3- Mining. Hence, the present appeal by the assessee. 4. We have heard learned counsel for the appellant. 5. The point for consideration is regarding the allowance of expenditure on purchase of coal from M/s North East Coal Mining. The Assessing Officer had disallowed by holding that the said party could not be traced at the given address. It was also observed that M/s North East Coal Mining was non-existing during the assessment proceedings relating to assessment year 2002-03 as well. This finding of the Assessing Officer was upheld by the CIT (A) and affirmed by the Tribunal. The Tribunal while upholding the aforesaid disallowance had recorded as under:- “9. We have considered the rival submissions carefully. In this case, the impugned disallowance has been made primarily for the reason that during the course of assessment proceedings for assessment year 2002-03, the Assessing Officer conducted enquiries through his counterpart at Gauhati and found that the purchases of coal effected by the assessee from certain parties were not genuine. The Income-tax authorities at Gauhati reported to the assessing officer that the parties could not be traced at the addresses stated. For the above reason, certain disallowances out of the coal purchases have been made by the Assessing Officer in this year also. Out of the four parties in question before us, one of the parties, namely M/s North East Coal Mining was ITA No. 785 of 2010 -4- found non-existing during the assessment proceedings for assessment year 2002-03 by the income-tax authorities, Gauhati. The Commissioner of Income-tax (A) records that the purchases made from the said party has been disallowed in the assessment year 2002-03 also. The Commissioner of Income-tax (A) has sustained a disallowance of Rs.1,34,569/- in this year too, representing coal purchased from the said party during the year under consideration. In view of the history culled out by the Commissioner of Income-tax (A) to which there is no controversion from the side of the assessee, we find no mistake in the disallowance sustained by the Commissioner of Income-tax (A). The disallowance of Rs.1,34,569/- stated to be purchases of coal effected from M/s North East Coal Mining is hereby sustained. 10. With regard to other three parties, we find that the same did not figure in the verification exercise conducted during the assessment proceedings for the assessment year 2002-03. Even during the year under consideration, the Assessing Officer has not conducted any verification exercise as done in the assessment year 2002-03 with respect to the said three parties. Therefore, under such circumstances, the issue relating to the purchases from the three ITA No. 785 of 2010 -5- parties in question cannot be decided in the same light. Ostensibly, the genuineness of purchase made from the said three parties is to be made on the basis of the material and the evidence on record. In this light, we have considered the material referred to by the assessee in its Paper Book. In this regard, the requisite evidence of transportation is available in the Paper Book. An evidence by way of Inward-Challans issued by Haryana Sales Tax Authorities, wherein the names of the consignor, being the three parties in question is also available on record. Furthermore, the certificate issued by the Sales Tax Authorities in Assam pertaining to the three parties have also been placed on record. All these evidences have been merely brushed aside by the Assessing Officer and thereafter by the Commissioner of Income-tax (A) on mere presumptions. In the absence of any contrary adverse material on record, in our considered opinion, the assessee has been successful in discharging the burden cast on it to justify the purchases from the three parties. We, therefore, find it expedient to delete the addition of Rs.2,03,126/- reflecting the purchases of coal effected from the three parties, namely M/s Aggarwal Coal Pvt. Ltd., M/s Signai Ceramics Pvt. Ltd. and M/s Bansal Associates Ltd. ITA No. 785 of 2010 -6- 11. Accordingly, out of the total addition of Rs.3,37,695/- sustained by the Commissioner of Income-tax (A), we direct the Assessing Officer to delete an addition of Rs.2,03,126/- and retain the addition of Rs.1,34,569/- only.” 6. Learned counsel for the appellant was unable to displace the aforesaid finding of fact concurrently recorded by the Assessing Officer, the CIT(A) and the Tribunal. It has not been shown to be perverse in any manner and, therefore, no interference is called for by this Court. Accordingly, no substantial question of law arises in this appeal. 7. The appeal stands dismissed. (AJAY KUMAR MITTAL) JUDGE January 12, 2011 (ADARSH KUMAR GOEL) gbs JUDGE "