THE COMMR.OF INCOME-TAX, LDH. vs. M/S.JAY KAY FEEDS PVT.LTD.

ITC/61/1999HC Punjab & HaryanaPHHC01038480199913 March 2013Author: MR. JUSTICE HEMANT GUPTA,MS. JUSTICE RITU BAHRI4 pages
AI SummaryDismissed

What were the facts?

The Revenue filed a petition under Section 256(2) of the Income Tax Act, 1961, challenging an order of the Income Tax Appellate Tribunal (ITAT) dated May 18, 1998, for assessment year 1987-88. The Assessing Officer (AO) estimated the assessee's sales at ₹2.30 crores, applying a 5% gross profit (GP) rate, resulting in a profit of ₹11,50,000. Considering the declared profit of ₹7,01,187 and a surrender of ₹4,00,000 under Section 132(4), the AO found concealed income of ₹48,813 and added another ₹50,000 for probable investment, totaling ₹98,813. The Commissioner of Income Tax (Appeals) deleted this addition, finding that sales outside books were ₹7,49,608, and applying a 5% GP rate yielded ₹37,480. The CIT(A) also adjusted the investment addition to ₹4,490, making a total addition of ₹41,970, which was covered by the surrender. The CIT(A) also cancelled interest under Sections 215/217, noting seized funds were available. The ITAT upheld the CIT(A)'s order.

What did the High Court hold?

The High Court held that no substantial question of law arose for consideration. Regarding the first issue, the Court found that the CIT(A)'s finding that sales to the tune of ₹7,49,608 were affected outside the books of account, and therefore the GP rate should be applied only to that amount, was a pure finding of fact. Consequently, the addition of ₹98,813 was set aside, and only income from concealed sales could be considered. For the second issue, the Court observed that the department had more funds in its control than the advance tax payable by the assessee. Therefore, it could not be said that the assessee was liable to pay interest on the amount of advance tax. The Court found no substantial question of law arising in the present appeal and dismissed the appeal.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in upholding the deletion of the addition of ₹98,813 by the Commissioner of Income Tax (Appeals), by observing that sales should not be estimated at ₹2.30 crores and total sales should be restricted to the figure declared by the assessee at ₹1,67,19,652, enhanced by ₹9.10 lakhs? 2. Whether, on the facts and circumstances of the case, the Income-tax Appellate Tribunal was right in law in disposing of the additional ground regarding cancellation by the CIT (A) of interest charged under Section 215/217 only by observing that the department had challenged only the admission of the additional ground by the CIT(A) and not impliedly challenged the decision on merits? Assessee's contentions: Regarding issue 1, the assessee contended that the CIT(A) correctly identified sales outside the books and applied the GP rate only to that amount. The addition of ₹98,813 was unjustified as it was covered by the surrender. The CIT(A)'s finding was a pure finding of fact. Regarding issue 2, the assessee argued that the department had sufficient funds seized to cover the advance tax liability, making interest under Sections 215/217 not leviable. Revenue's contentions: The Revenue argued that the ITAT was wrong in upholding the deletion of the addition and in its reasoning regarding the cancellation of interest.

Which sections of the Income-tax Act were involved?

Section 256(2),Section 132(4),Section 215,Section 217

AI-generated summary — verify with the full judgment below

ITC No. 61 of 1999 -1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH Date of decision: 13.03.2013 ITC No. 61 of 1999 (O&M)

The Commissioner of Income Tax, Rishi Nagar, Ludhiana ...Appellant versus M/s Jay Kay Feeds (P) Ltd. Sarabha Nagar, Ludhiana ...Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI Present:- Mr. Rajesh Katoch, Advocate for the appellant.

Mr. Akshay Bhan, Advocate and Mr. Alok Mittal, Advocate for the respondent. HEMANT GUPTA, J. (ORAL)

The present petition under Section 256(2) of the Income Tax Act, 1961 (for short 'the Act') is by the Revenue arising out of an order of the Income Tax Appellate Tribunal (for short 'the Tribunal') dated 18.05.1998 pertaining to the assessment year 1987-88, claiming the following substantial questions of law:- “1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding deletion of addition of `98,813/- by the Commissioner of Income Tax (Appeals) by observing that the sales should not be estimated at the figure of ` 2.30 crores and total sales should be restricted to the figure declared by the assessee at `1,67,19,652/- by en

The order continues below.

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