CIT-II, CHANDIGARH vs. JASBIR SINGH AND ORS.

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ITA/458/2009HC Punjab & HaryanaPHHC01084567200901 February 2010Author: MR. JUSTICE M.M. KUMAR,MR JUSTICE RAKESH KUMAR JAIN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal did not involve a substantial question of law, as it was primarily based on findings of fact. The Tribunal had made a firm finding that no contractor was involved in the purchases of fish worth Rs. 43,12,297/-, supported by an affidavit from a partner of the assessee firm. The Court agreed with the Tribunal that the Assessing Officer's assumption of a contractor was not substantiated by evidence. Relying on the Supreme Court's judgment in CIT v. Daulat Ram Rawat Mal (1973) 87 ITR 349, the Court concluded that if the factual basis for invoking Section 40(a)(ia) was absent, no substantial question of law could arise. Consequently, the appeal was not admitted and was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax II, Chandigarh, appealed an order dated February 20, 2009, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench B. The appeal pertained to assessment year 2005-06. The Assessing Officer and Commissioner of Income Tax (Appeals) had disallowed purchases of fish amounting to Rs. 43,12,297/-, treating it as contract payment and invoking Section 40(a)(ia) of the Income Tax Act, 1961. The ITAT, however, found that no contractor was involved, supported by an affidavit from a partner of the assessee firm. The ITAT noted that the Assessing Officer's assumption of a contractor was not supported by evidence.

What were the issues?

1. Whether a substantial question of law arises for determination within the meaning of Section 260A of the Income Tax Act, 1961, when the appeal is based on findings of fact. The Revenue contended that the ITAT erred in deleting the disallowance made under Section 40(a)(ia) of the Act. The Revenue likely argued that the purchases constituted payments to contractors on which tax was not deducted at source, thus attracting the disallowance. The Revenue's argument would have implicitly challenged the ITAT's factual finding regarding the absence of a contractor. The Assessee, Jasbir Singh and others, would have argued that the ITAT's finding of fact that no contractor was involved was correct and supported by evidence, including an affidavit. Therefore, the conditions for invoking Section 40(a)(ia) were not met, and the disallowance was unjustified. The Assessee would have argued that the appeal did not raise a substantial question of law.

Which sections of the Income-tax Act were involved?

Section 40(a)(ia),Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision 1.2.2010 Commissioner of Income Tax II, Chandigarh ... Appellant Versus Jasbir Singh and others ... Respondents. CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE RAKESH KUMAR JAIN Present: Ms. Urvashi Dhugga, Advocate for the appellant

1.

Whether Reporters of local papers may be allowed to see the judgement ?

2.

To be referred to the Reporter or not ?

3.

Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The instant appeal has been filed against order dated 20.2.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench B (for brevity 'the Tribunal') passed in ITA No.1020/Chandi/2008 in respect of the assessment year 2005-06. The Assessing Officer as well as the Commissioner of Income Tax (A) have assessed the purchases of fish worth Rs. 43,12,297/- being contract payment and has invoked the provisions of Section 40(a)(ia) of the Income Tax Act, 1961(for brevity 'the Act'). The Tribunal has, however recorded a firm finding of fact that no contractor was involved and an affidavit by a partner of the assessee- firm was also filed. There is nothing to the contrary to prove the statement made on affidavit to be false. The Tribunal has, however, opined that the Assessing Officer has proceeded on the assumption that a contractor was engaged and it cannot take the shape of evidence. It has rightly relied upon the judgement of Hon'ble the Supreme Court rendered in the case of CIT

v. Daulat Ram Rawat Mal (1973) 87 ITR 349. Once the factual basis necessary for invoking the provisions of Section 40(a)(ia) of the Act is missing then it is not possible to opine that a substantive question of law within the meaning of Section 260A of the Act would arise for determination. The appeal is based on findings of fact and does not deserve admission. Accordingly, the appeal fails and the same is dismissed. (M.M.Kumar) Judge (Rakesh Kumar Jain) 1.2.2010 Judge okg

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