M/S. NARULA FILLING STATION SARNA PKT. vs. CIT JAMMU

ITA/45/2003HC Punjab & HaryanaPHHC01053270200323 August 2022Author: MR. JUSTICE TEJINDER SINGH DHINDSA,MR. JUSTICE DEEPAK MANCHANDA6 pages
AI SummaryDismissed

What were the facts?

The assessee, M/s. Narula Filling Station, a partnership firm, is in appeal against the order of the Income Tax Appellate Tribunal (ITAT). A search under Section 132 of the Income Tax Act was conducted on October 9, 1997. A notice under Section 158BC was issued on October 16, 1998, for the block period April 1, 1987, to October 9, 1997. The assessee filed a return declaring undisclosed income of Rs. 58,000. The Assessing Officer (AO) assessed the total income at Rs. 3,40,180, making additions for salary, car expenses, and non-availability of cash memos/closing stock, applying a Gross Profit (GP) rate of 33.64%. The Commissioner of Income Tax (Appeals) partly allowed the appeal, granting relief of Rs. 76,200. The ITAT partly allowed the assessee's appeal, leading to the present appeal before the High Court.

What did the High Court hold?

The High Court held that the notice under Section 158BC was not invalid. The assessee, having participated in multiple hearings and filed returns in the status of a firm, could not claim to be misled. Any defect in the notice was curable under Section 292B, and the plea of invalidity was not raised before the AO. Regarding the GP rate, the High Court noted that the AO did not provide a basis for the 33.64% rate. The ITAT, however, found that the assessee's own GP rate for Assessment Year 1997-98 was 25.54%. Since the block period included Assessment Year 1997-98 and the immediately preceding period, the ITAT directed the AO to apply the GP rate of 25.54% on the stock found short amounting to Rs. 3,64,163. The court found no merit in the appeal and no substantial question of law arose. The ITAT's order was deemed well-reasoned and not requiring interference.

What were the issues?

1. Whether the notice under Section 158BC is legally valid as it was not addressed to any partner and did not mention the status of the assessee? (Question of law) 2. Whether the ITAT was justified in levying a GP rate of 25.54%? (Question of mixed law and fact) 3. Whether the orders Annexures P-1, P-2, and P-3 are legally sustainable? (Question of law) Assessee's contentions: - The notice under Section 158BC was not addressed to any partner and lacked status, making it vague, void ab initio, and illegal, vitiating the AO's jurisdiction. The defects were substantive, not procedural. - The ITAT was unjustified in levying a GP rate of 25.54% as no sales outside the books were found. - Orders Annexures P-1, P-2, and P-3 are legally unsustainable. Revenue's contentions: - The judgment records no specific contentions for the revenue on these issues, but the High Court's reasoning addresses the assessee's arguments.

Which sections of the Income-tax Act were involved?

Section 260A,Section 132,Section 158BC,Section 282,Section 143(2),Section 142(1),Section 158BFA(1),Section 158BFA(2),Section 292B

AI-generated summary — verify with the full judgment below

ITA-45-2003 1 212 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-45-2003 Date of decision: 23.08.2022 M/s. Narula Filling Station ...Appellant V/s Commissioner of Income Tax, Jammu and Anr. ...Respondents CORUM: HON’BLE MR. JUSTICE TEJINDER SINGH DHINDSA HON’BLE MR. JUSTICE DEEPAK MANCHANDA Present: Mr. Akshay Bhan, Sr. Advocate With Mr. Shantanu Bansal, Advocate for the appellant.

Mr. Vivek Sethi, Learned Senior Standing Counsel for the respondents. **** DEEPAK MANCHANDA J.

This appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as 'the Act', for short) has been preferred by the assessee, which was admitted by a bench of this court vide order dated 22.04.2003 and the following substantial questions of law, have been claimed for determination of this court : i) Whether, in the facts and circumstances of the case, the impugned notice under Section-158BC is legally valid as such as it was not addressed to any of the partners of the assessee firm and did not mention the status? ii) Whether in the case’s facts and circumstances, the Ld. ITAT was justified in levying a GP rate of 25.54%? iii) Whether in the facts and circu

The order continues below.

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