COMMISSIONER OF INCOME TAX-IV vs. SANDEEP INTERMEDIATES PVT LTD

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TAXAP/1308/2011HC GujaratGJHC24025714201105 September 2012Author: HONOURABLE MR. JUSTICE VIJAY MANOHAR SAHAI,HONOURABLE MR. JUSTICE N.V.ANJARIA3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that it did not find any error in the order of the Tribunal. The Tribunal had allowed the miscellaneous application, reasoning that since the aspect raised by the assessee (allowability of expenditure under Section 37 if Section 69C addition was upheld) was not considered in the main appeal by the co-ordinate bench, it was proper and legal to recall the operation of the order. The Tribunal intended to decide the matter denovo as per the applicable law. The High Court concluded that the question raised by the appellant (Revenue) did not involve any substantial question of law and therefore, the appeal was not liable to be entertained. The appeal was dismissed.

What were the facts?

The Revenue appealed an order dated 07.06.2007 of the Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench 'B', which arose from Misc. Application No.48 of 2010. This application stemmed from the ITAT's earlier order in ITA No.3015 of 2002 concerning Assessment Year 1993-94. The Assessing Officer had made an addition of Rs. 13,70,145/- under Section 69C for unexplained raw material, rejecting the assessee's explanation that it was shifted from a sister concern. The CIT(A) confirmed this addition. The ITAT had initially dismissed the assessee's appeal. Subsequently, the assessee filed a Misc. Application under Section 254(2) arguing that if the amount was treated as bogus purchases and disallowed under Section 69C, it should be allowed as a deduction under Section 37 as actual expenditure recorded in books.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in recalling its earlier order under the purported exercise of power u/s 254(2) of the Act, when in the present fact situation it amounted to review of its earlier order? Assessee's contention (as inferred from the Misc. Application): If the addition under Section 69C for unexplained raw material (treated as bogus purchases) was upheld, then the same expenditure should be allowed as a deduction under Section 37 of the Income Tax Act, 1961, as it was actually incurred and recorded in the books of accounts. This aspect, the assessee argued, was not considered in the main appeal. Revenue's contention: The ITAT's action in recalling its earlier order under Section 254(2) amounted to a review of its own order, which is impermissible.

Which sections of the Income-tax Act were involved?

Section 69C,Section 37,Section 254(2),Section 143(3)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
TAXAP/1308/2011 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 1308 of 2011 For Approval and Signature: HONOURABLE MR.JUSTICE V. M. SAHAI HONOURABLE MR.JUSTICE N.V. ANJARIA ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= COMMISSIONER OF INCOME TAX-IV - Appellant(s) Versus SANDEEP INTERMEDIATES PVT LTD – Opponent(s) ========================================================= Appearance : MRS MAUNA M BHATT for Appellant(s) : 1, None for Opponent(s) : 1, ========================================================= CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA TAXAP/1308/2011 2/3

JUDGMENT Date : 05/09/2012 ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE N.V. ANJARIA) The present appeal by the Revenue arises out of order dated 07.06.2007 of the Income Tax Appellate Tribunal, Ahmedabad Bench ‘B’, passed in common in Misc. Application No.47 of 2010 and 48 of 2010. These applications in turn arose from the order of the Tribunal in ITA Nos.3014 of 2002 and 3015 of 2002 for the Assessment Years 1992-93 and 1993-94 respectively. The present appeal is directed against the said common order insofar as it concerns Misc. Application No.48 of 2010.

1.

1 Following question is raised by the appellant proposing it to be a substantial question of law. “ Whether the Appellate Tribunal is right in law and on facts in recalling its earlier order under the purported exercise of power u/s 254(2) of the act, when in the present fact situation it amounted to review of it's earlier order?”

2.

We heard learned advocate Ms. Paurami Sheth for the appellant.

3.

At the time of considering the return of income of the respondent assessee for the Assessment Year 1993-94, the Assessing Officer by order under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the act' for sake of brevity) dated 27.11.1995 made addition of Rs. 13,70,145/- under section 69C of the Act on account of unexplained quantity of raw material, by rejecting the explanation of the assessee that they were the materials shifted from the premises of sister concern for use in production by the assessee and they were entered into the production register. The Commissioner of Income-tax (Appeals) by his order dated 06.05.2002 confirmed the addition made by the Assessing Officer. It further appears that appeals of the assessee being ITA No.3013 of 2002 for Assessment Year 1985-86, No.3014 of 2002 for Assessment Year 1992-93 and No.3015 of 2002 for Assessment Year 1993-94 came to be dismissed by TAXAP/1308/2011 3/3 JUDGMENT a consolidated order dated 07.06.2007 of the Tribunal.

3.

1 Against that order of the Tribunal, the assessee filed above mentioned Misc. Applications for two Assessment Years being 1992-93 and 1993-94 under section 254(2) of the Act on 08.03.2010. For the Assessment Year under consideration, it was Misc. Application No.48 of 2010. The application was filed on a plea that the assessee was a business man and if the amount in question was treated as bogus purchases and hence disallowed under section 69C, the same should be allowed as deduction under section 37 of the Act as the expenditure was incurred actually and recorded in the books of accounts.

3.

2 The Tribunal in the impugned order allowed the miscellaneous application holding that since the said aspect was not considered in the main appeal by the co-ordinate bench, it was proper and legal to recall that operation of the order. The Tribunal held that the same may be decided denovo as per law applicable for the year under consideration.

4.

In the totality of facts and circumstances, we do not find any error in the order of the Tribunal. The question raised by the appellant does not involve any substantial question of law. Therefore, the appeal is not liable to be entertained.

5.

Accordingly, the appeal is dismissed. [V.M.SAHAI, J.] [N.V.ANJARIA, J.] cmjoshi

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