C I T JAIPUR vs. M/S RAJ STATE HANDLOOM DEV CORP LTD

ITA/504/2011HC RajasthanRJHC02057964201104 January 2012Author: NARENDRA KUMAR JAIN,ARUN MISHRA3 pages
AI SummaryDismissed

What were the facts?

The Revenue filed an appeal before the High Court against an order of the Income Tax Appellate Tribunal (ITAT) for Assessment Year 2002-03. The ITAT had dismissed the Revenue's appeal, thereby upholding the order of the Commissioner of Appeals. The dispute arose from the Assessing Officer's (AO) invocation of Section 145(3) of the Income Tax Act, leading to the rejection of the assessee's books of account and subsequent additions. The Commissioner of Appeals had found that the AO was not justified in rejecting the books and granted relief to the assessee. The ITAT concurred with the Commissioner of Appeals' findings. The High Court noted that a similar appeal (ITA No. 503/2011) involving the same issue had been dismissed on October 14, 2011.

What did the High Court hold?

The High Court held that the appeal did not involve any substantial question of law within the meaning of Section 260-A of the Income Tax Act. The Court reasoned that the issue primarily involved a question of fact, not a question of law. It stated that the High Court cannot undertake a re-examination of factual issues or draw factual inferences in an appeal under Section 260-A. Once an appellate court accepts an explanation on facts, that finding is binding on the High Court. The Court further noted that the Tribunal had examined the issue in detail and concurred with the Commissioner of Appeals. The High Court would not conduct a de novo factual inquiry. A substantial question of law would only arise if a factual finding was entirely dehors the subject, based on no reasoning, absurd reasoning, or against a provision of law, which was not the case here. Therefore, the appeal was dismissed in limine.

What were the issues?

1. Whether the appeal involves any substantial question of law within the meaning of Section 260-A of the Income Tax Act, 1961, arising from the Tribunal's order upholding the Commissioner of Appeals' decision to delete additions made by the AO. Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue contended that the Tribunal's order dismissing its appeal, which upheld the Commissioner of Appeals' decision to delete additions made under Section 145(3), involved a substantial question of law. The Revenue argued that the High Court should examine the factual issues and the reasoning of the appellate authorities. The judgment also refers to the reasoning of the CIT(Appeals) which stated that the AO had not considered the change in the assessee's business activity (from manufacturing and trading to mostly trading) and had primarily relied on audit report qualifications without pointing out specific defects in the books of accounts. The AO also failed to provide a basis for rejecting the assessee's claim and reducing the loss.

Which sections of the Income-tax Act were involved?

Section 145(3),Section 260-A

AI-generated summary — verify with the full judgment below

1 ITA No.504/2011 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JAIPUR BENCH, JAIPUR D.B. Income Tax Appeal No.504/2011 Commissioner of Income-Tax-I V/s. M/s.Rajasthan State Handloom DATE OF JUDGMENT : 4th JANUARY, 2012 HON'BLE THE CHIEF JUSTICE MR.ARUN MISHRA HON'BLE MR. JUSTICE NARENDRA KUMAR JAIN-I Mr.J.K. Singhi, Sr.Counsel with Mr.Anuroop Singhi, for the appellant. Counsel appearing on behalf of appellant has conceded that other similar appeal (Income Tax Appeal No.503/2011) has been dismissed vide order dated 14th October, 2011, in which similar question was involved. In that appeal following order was passed : “This is an appeal filed by the Revenue under Section 260-A of the Income Tax Act against an order dated 30.11.2010 passed by I.T.A.T., Jaipur Bench, Jaipur (for short called Tribunal) in I.T.A. No.565/JP/2010 arising out of AY 2002-03. 2. By the impugned order, the Tribunal dismissed

the appeal of Revenue and in consequence upheld the order of Commissioner of Appeals.

3.

So the question that arises for consideration in these appeals is whether appeal involves

The order continues below.

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