C I T vs. OM OVERSEAS

ITA/550/2007HC Punjab & HaryanaPHHC01073259200704 March 2008Author: MR. JUSTICE SATISH KUMAR MITTAL,MR JUSTICE RAKESH KUMAR GARG4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the revenue. The Court found no force in the revenue's arguments. It noted that the CIT(A) had made a finding of fact that the additions were made by the AO without pointing out any specific defect in the books of accounts. This finding was further upheld by the Tribunal. The revenue's counsel was unable to point out any illegality or perversity in this finding of fact during the arguments. Therefore, the Court found no infirmity in the order of the Tribunal and concluded that no substantial question of law arose for determination. The addition of Rs. 20,83,752/- was deleted by the CIT(A) and upheld by the Tribunal.

What were the facts?

The assessee, Om Overseas, a partnership firm engaged in manufacturing and export of Duries, Rugs, woollen carpets, and made-ups, filed its return for assessment year 2001-2002 declaring Nil income. The Assessing Officer (AO) assessed the income at Rs. 14,60,740/-, noting a decline in Gross Profit Rate (GPR) from 29.5% to 25.38%. The AO rejected the assessee's books of accounts under Section 145(3) of the Income-tax Act, 1961, due to unsatisfactory explanation for the GPR decline and the failure to produce quantitative details of raw materials and finished products. This led to an addition of Rs. 20,83,752/-. The Commissioner of Income Tax (Appeals) deleted this addition, finding no specific defects in the books. The Income-Tax Appellate Tribunal upheld the CIT(A)'s deletion. The revenue appealed to the High Court.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the Ld. ITAT was right in law in upholding the order of the CIT(A), in deleting the trading addition of Rs.20,83,752/- made by the A.O., as the assessee failed to produce the quantitative details of raw material and finished products? (Question of law turning on Section 145(3) of the Income-tax Act, 1961). 2. Whether on the facts and in the circumstances of the case, the findings recorded by the Ld. ITAT are perverse and contrary to material available on the record? (Question of mixed law and fact). Assessee's contentions: Not recorded. Revenue's contentions: The AO rightly rejected the books of accounts and made additions under Section 145(3) because the GPR declared at 25.38% could not be verified from the manufacturing records maintained by the assessee.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143(3),Section 145(3)

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IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 4.3.2008 The Commissioner of Income tax, ......Appellant Karnal Versus Om Overseas, Shiv Nagar, Krishan Pura, Panipat ......Respondent CORAM:- HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR.JUSTICE RAKESH KUMAR GARG * * * Present: Mr. Yogesh Putney, Advocate for the appellant-revenue. * * * Rakesh Kumar Garg, J .

1.

The revenue has filed the present appeal under Section 260A of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) against the order dated 23.2.2007 passed by the Income-Tax Appellate Tribunal, New Delhi Bench 'E' in ITA No.4496/Del/2004 for the assessment year 2001-2002 raising the following substantial questions of law:- “1. Whether on the facts and in the circumstances of the case, the Ld. ITAT was right in law in upholding the order of the CIT(A), in deleting the trading addition of Rs.20,83,752/- made by the A.O., as the assessee failed to produce the quantitative details of raw material and finished products?

2.

Whether on the facts and in the circumstances of the case, the findings recorded by the Ld. ITAT are perverse and contr

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