M/S GHERU LAL BAL CHAND vs. COMMISSIONER OF INCOME TAX,JAL

ITA/48/2000HC Punjab & HaryanaPHHC01046013200013 January 2020Author: MR. JUSTICE AJAY TEWARI,MR. JUSTICE AVNEESH JHINGAN4 pages
AI SummaryDismissed

What were the facts?

The assessee, M/s Gheeru Lal Bal Chand, is in appeal against an order of the Income Tax Appellate Tribunal (ITAT) which upheld the assessment made by the Assessing Officer. The assessee had purchased 2991 bales of cotton. It claimed that 1411 bales were its own purchases, on which it earned reported profit, and the remaining 1580 bales were purchased on behalf of other persons, earning only commission, with profits going to those others. The Assessing Officer concluded it was a case of diversion of profits, as the assessee failed to prove purchases on behalf of others. The Commissioner granted partial relief, but the Revenue's appeal led to the restoration of the Assessing Officer's order by the ITAT.

What did the High Court hold?

The High Court held that the questions raised were pure questions of fact and no substantial questions of law arose. The Court found the facts of the present case to be similar to those in New Kailash Cotton Factory Vs. Assessing Officer-cum-Income Tax Officer, Ward No.1, Mansa (Punjab), ITA No.510 of 2006, decided on 21.03.2007. In that case, the Court had noted that the assessee failed to prove the genuineness of transactions for diverting profits, lacked written or oral agreements, invested its own funds, did not maintain 'Sauda Bahi', and used its own infrastructure. The Court concluded that the findings were based on evidence and not perverse, and therefore, no substantial question of law was made out. Consequently, the appeal was dismissed.

What were the issues?

1. Whether the orders Annexure P-1 and P-3 are legally sustainable (mixed law and fact)? 2. Whether the confirmation of the regular assessment is legally sustainable given earlier ITAT decisions in similar cases (Income Tax Appeal Nos.271 and 240 (ASR)/1992 and I.T.A. No.1014 (ASR)/1990) (mixed law and fact)? 3. Whether the assessment confirmation is legally sustainable without a specific challenge to the correspondence, contracts, and affidavits produced by the assessee (mixed law and fact)? 4. Whether the addition of Rs.2,13,330/- on account of diversion of profits was legally justified based on presumptions without independent evidence (mixed law and fact)? Assessee's contentions: The assessee argued that the assessment confirmation was unsustainable due to earlier favorable ITAT decisions on similar facts and grounds, and in the absence of a specific challenge to its documentary evidence. The Revenue argued that the assessee failed to prove the genuineness of transactions for diverting profits, lacked agreements, used its own funds and infrastructure, and did not maintain 'Sauda Bahi'.

Which sections of the Income-tax Act were involved?

Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision : 13.01.2020 M/s Gheeru Lal Bal Chand ....... Appellant versus Commissioner of Income Tax, Jalandhar & anr. ...... Respondents CORAM : HON'BLE MR.JUSTICE AJAY TEWARI HON'BLE MR.JUSTICE AVNEESH JHINGAN *** Present : Mr. Alok Mittal, Advocate for the appellant. Mr. Vivek Sethi, Advocate with Mr. Varun Issar, Advocate for the respondents.

*** AJAY TEWARI, J. (Oral) 1 This appeal has been filed against the order of the Tribunal setting aside that of the Commissioner and upholding the assessment made by the Assessing Officer. 2 The following questions of law have been framed :- (a) Whether in the facts and circumstances of the case, the orders Annexure P-1 and P-3 are legally sustainable ? (b) Whether in the facts and circumstances of the case, the confirmation of the regular assessment made is legally sustainable in view of the earlier decisions of the Income Tax Appellate Tribunal in Income Tax Appeal Nos.271 and 240 (ASR)/1992 and I.T.A. No.1014 (ASR)/1990 wherein on similar grounds and on similar facts, the I.T.A.T. had held in favour of the assesse

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