G V (GOD VISHNU) RICE UNIT vs. COMMISSION OF INCOME TAX

ITA/295/2012HC Punjab & HaryanaPHHC01099377201229 July 2013Author: MR. JUSTICE DR. BHARAT BHUSHAN PARSOON,MR. JUSTICE RAJIVE BHALLA4 pages
AI SummaryDismissed

What were the facts?

The assessee, G.V. (God Vishnu) Rice Unit, a partnership concern engaged in processing and sale of rice, filed its return for Assessment Year 2008-2009 at Rs. 23,97,763.76. The Assessing Officer (AO) noted a significant fall in gross profits compared to the previous year and, after the assessee's explanation, made an ad-hoc addition of Rs. 4,00,000/- for declaring low gross profits. The assessee's appeal to the CIT(A) was dismissed, and a further appeal to the Income Tax Appellate Tribunal (ITAT) also failed. The assessee then filed an appeal before the High Court against the ITAT's order dated 20.07.2012.

What did the High Court hold?

The High Court held that the questions framed by the assessee were essentially questions of fact and details, not substantial questions of law. The court noted that while the assessee provided year-wise details of income, stock, purchases, and sales for over 12 years, it failed to provide quality-wise details of paddy, rice, and by-products when demanded by the AO. The assessee conceded its inability to furnish such quality-wise details. The court found that the stock register lacked quality-wise details and the valuation of stock was not made on any proper method. The information supplied was deficient in material particulars, and the assessee showed helplessness to provide better particulars. Consequently, the ad-hoc addition made by the AO, confirmed by the appellate authorities, was based on these factual deficiencies. Since no substantial question of law arose, the appeal was dismissed.

What were the issues?

1. Whether, under the facts and circumstances, the Tribunal's order is unsustainable and perverse for overlooking material facts and particulars, erroneously assuming jurisdiction, and not invoking Section 145 of the Income Tax Act, 1961? (Question of law/mixed law and fact, concerning Section 145) 2. Whether, under the facts and circumstances, the Tribunal's conclusions are unreasonable and dehors the material on record, being in-apposite to the assessment order and CIT(A) order? (Question of law/mixed law and fact) Assessee's Contentions: The assessee argued that the decrease in Gross Profit rate from 7.64% to 5.91% was due to a lower average realization per Dollar (Rs. 39.70 vs. Rs. 44.71) and increased production costs (41.59%) compared to sales price increase (37.03%). Revenue's Contentions: The revenue contended that the assessee's accounts were not genuine, presenting a make-believe version. It argued that quality-wise details of paddy, rice, and by-products were not provided, the books of accounts were contrived, and material information was lacking, justifying the addition of Rs. 4 lacs.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 145

AI-generated summary — verify with the full judgment below

HIGH COURT OF PUNJAB AND HARYANA CHANDIGARH. *** Date of decision: 29.07.2013 *** G.V.(God Vishnu) Rice Unit, G.T.Road, through Partner Shri Parmod Kumar, Taraoi, Karnal (Haryana).

Versus Commissioner of Income Tax, Karnal. *** CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA HON'BLE MR. JUSTICE DR. BHARAT BHUSHAN PARSOON. *** Present: Shri Pankaj Jain, Advocate, for the appellant. *** DR. BHARAT BHUSHAN PARSOON, J This appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter to be referred to as, “the Act”), is directed against the order dated 20.7.2012 of Income Tax Appellate Tribunal, Delhi Bench “C”, Delhi in I.T.A No. 156/DEL/2012 for the assessment year 2008-2009.

Details of facts The appellant is a partnership concern running a Rice Sheller and is engaged in the business of processing as also of sale of rice and its bye-products. It had filed its return at an amount of Rs.23,97,763.76 with audit report etc. There was considerable fall in the gross profits in comparison to the previous assessment year 2007-2008. The appellant was called upon to explain the reasons thereof. Notwithstanding the explanation given by

The order continues below.

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