THE COMMISIONER OF INCOME TAX vs. M/S LEADER PAPER PROCESING

ITC/77/1997HC Punjab & HaryanaPHHC01035322199712 March 2013Author: MR. JUSTICE HEMANT GUPTA,MS. JUSTICE RITU BAHRI2 pages
AI SummaryDismissed

What were the facts?

The Revenue filed a petition under Section 256(2) of the Income Tax Act, 1961, seeking a reference to the High Court on a substantial question of law. The dispute pertains to assessment year 1987-88. The Assessing Officer (AO) made an addition of Rs. 1,84,642/- to the assessee's income by applying a gross profit (GP) rate of 20% on enhanced sales. The Commissioner of Income Tax (Appeals) upheld this addition. However, the Income Tax Appellate Tribunal (ITAT) reversed the CIT(A)'s order, applying a GP rate of 19.72%. The ITAT noted that this rate was applied in the earlier assessment years 1985-86 and 1986-87, and the GP rate for 1985-86 was affirmed by the CIT(A). The Revenue contested the ITAT's decision to deviate from the AO's and CIT(A)'s findings.

What did the High Court hold?

The High Court held that the question of whether a 20% or 19.72% gross profit rate should be applied is a question of fact. The Tribunal had applied the GP rate of 19.72% because it was applied in the earlier assessment years 1985-86 and 1986-87. The Court found that no substantial question of law arose for its consideration. Consequently, the Revenue's petition was dismissed. The operative direction was the dismissal of the petition, leaving the ITAT's order undisturbed. No issue was expressly left undecided.

What were the issues?

1. Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal is right in law in reversing the order of the learned CIT (A) who upheld the application of the provision of Section 145(2) and consequent addition of Rs. 1,59,000/- as against Rs. 1,84,642/- made by the A.O? Assessee's Contention: The judgment does not record any specific contentions made by the assessee. The ITAT's decision, as narrated in the facts, was based on the GP rate applied in earlier years. Revenue's Contention: The Revenue argued that the ITAT was not right in reversing the order of the CIT(A) who had upheld the AO's application of Section 145(2) and the consequent addition of Rs. 1,84,642/-. The Revenue sought to frame the issue as a substantial question of law arising from the ITAT's order.

Which sections of the Income-tax Act were involved?

Section 145(2),Section 256(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 12.3.2013

ITC No. 77 of 1997 The Commissioner of Income Tax ......Petitioner vs. M/s Leader Paper Processing (P) Ltd. .....Respondent CORAM: - HON’BLE MR. JUSTICE HEMANT GUPTA HON'BLE MS. JUSTICE RITU BAHRI

Present: - Mr. Vivek Sethi, Advocate for the petitioner. .......

Revenue has filed the present petition under Section 256(2) of the Income Tax Act, 1961 (for short the 'Act') claiming following substantial question of law as arising out of the order of the Income Tax Appellate Tribunal (for short the 'Tribunal') dated 18.2.1997 in relation to the assessment year 1987-88 for consideration: - “Whether, on the facts and in the circumstances of the case, the learned Income Tax Appellate Tribunal is right in law in reversing the order of the learned CIT (A) who upheld the application of the provision of Section 145(2) and consequent addition of Rs. 1,59,000/- as against Rs. 1,84,642/- made by the A.O? The said question is said to have arisen out of an order passed by the assessing officer on 30.3.1990 (Annexure P-3), applying gross profit rate of 20% on the correspondingly enhanced sa

The order continues below.

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