M/S.KALPAKA BAZAR vs. THE COMMISSIONER OF INCOMETAX, KOCHI

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ITA/173/2002HC KeralaKLHC01020996200226 February 2008Author: HONOURABLE MR.JUSTICE T.R.RAMACHANDRAN NAIR,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue of sustaining the addition of Rs. 10 lakhs was a pure question of fact based on evidence. The Court noted that Section 260A of the Income Tax Act, 1961, empowers it to interfere with Tribunal orders only on substantial questions of law. As no such question of law, let alone a substantial one, arose from the ITAT's order, the High Court found no scope for re-examining the evidence. Consequently, the appeal was dismissed. The ratio is that appeals under Section 260A are limited to substantial questions of law, and factual findings by the Tribunal, supported by evidence, are generally not re-opened.

What were the facts?

The assessee, M/s. Kalpaka Bazar, a textile merchant, was subjected to a search by the Income Tax Department. Based on materials gathered and statements from employees, the Assessing Officer added Rs. 40 lakhs towards unaccounted sales. The Commissioner of Income Tax (CIT) reduced this addition to Rs. 10 lakhs. The Income Tax Appellate Tribunal (ITAT) upheld the CIT's order, rejecting both the Department's appeal and the assessee's cross-objection. The Department accepted the ITAT's decision, but the assessee filed an appeal before the High Court against the ITAT's order sustaining the Rs. 10 lakh addition.

What were the issues?

1. Whether the Tribunal was justified in sustaining an addition of Rs. 10 lakhs to the assessee's income (question of fact). Assessee's Contention: The assessee argued that the Tribunal had taken a different view in a related penalty appeal, implying a potential inconsistency or error in the current order. However, the High Court did not record specific arguments from the assessee regarding the merits of the Rs. 10 lakh addition itself. Revenue's Contention: The revenue did not present any arguments as the High Court dismissed the appeal on the grounds of no substantial question of law.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

Heard together (2 matters)

ITA.755/COCH/1990

C.O.NO.42/COCH/1990

Read from the judgment's own cause title. This page is filed under one of them.

Cause title — parties, addresses and appearances

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE T.R.RAMACHANDRAN NAIR TUESDAY, THE 26TH FEBRUARY 2008 / 7TH PHALGUNA 1929 ITA.No. 173 of 2002() --------------------- AGAINST ORDER DATED 31/01/2002 IN ITA.755/COCH/1990 AND C.O.NO.42/COCH/1990 of I.T.A.TRIBUNAL,COCHIN BENCH .................... : APPELLANT/RESPONDENT CROSS OBJECTOR/ASSESSEE ------------------------------------------------------------- M/S.KALPAKA BAZAR,TOWN HILL ROAD, CALICUT,REPRESENTED BY ITS MANAGING PARTNER SHRI.M.A.UNNEERIKUTTY BY ADV. SRI.C.KOCHUNNY NAIR SRI.DALE P.KURIEN RESPONDENTS: APPELLANT-RESPONDENT/REVENUE ----------------------------------------- THE COMMISSIONER OF INCOME TAX,CALICUT BY ADV. SRI.P.K.R.MENON(SR.),SR.COUNSEL FOR IT SRI.GEORGE K. GEORGE, SC FOR IT THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 26/02/2008 , THE COURT ON 26/02/2008 DELIVERED THE FOLLOWING: C.N.RAMACHANDRAN NAIR & T.R.RAMACHANDRAN NAIR, JJ. ------------------------- I.T.A. No. 173 of 2002 --------------------------------- Dated, this the 26th day of February, 2008

J U D G M E N T C.N.Ramachandran Nair, J. Even though several questions are raised by the assessee in the appeal filed by it, the one issue to be considered is whether the Tribunal was justified in sustaining an addition of Rs.10 lakhs. It is seen that assessee, which was a textile merchant, was searched by the Department and statements of the employees were also recorded thereafter. Based on materials collected and statements recorded from the employees, the Assessing Officer made an addition of Rs.40 lakhs towards unaccounted sale of stock. In appeal the first appellate authority considered the entire evidences in detail and reduced the addition from Rs.40 lakhs to Rs.10 lakhs. On appeal filed by the Department and cross objection by the assessee, the Tribunal upheld the order of the CIT and rejected both the appeal and cross objection. While the Department accepted the order of the Tribunal, the assessee has came up in appeal against the order in the cross objection sustaining the addition of Rs.10 lakhs.

We have heard learned counsel appearing for the -2- assessee/appellant and learned standing counsel for the respondent.

We are of the view that the question decided is only a pure question of fact based on evidence. Even though learned counsel for assessee submitted that the Tribunal has taken a different view in the penalty appeal, we do not think any scope for re-considering the evidence and deciding the matter because Section 260A authorises this Court to interfere with orders of the Tribunal only on substantial question of law. Since there is no question of law arising from the order of the Tribunal much less any substantial question of law, this income tax appeal is dismissed as devoid of any merit. (C.N.RAMACHANDRAN NAIR, JUDGE) (T.R.RAMACHANDRAN NAIR, JUDGE) jg

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