COMMISSIONER OF INCOME TAX vs. ABHISHEK CORPORATION

ITA/272/1999HC GujaratGJHC24025011199925 October 1999Author: HONOURABLE MR. JUSTICE B.C.PATEL,HONOURABLE MR. JUSTICE P.B.MAJMUDAR4 pages
AI SummaryDismissed

What were the facts?

The Commissioner of Income-tax (CIT), Surat, filed an application under Section 256(2) of the Income-tax Act, 1961, before the High Court of Gujarat at Ahmedabad, seeking a reference of two questions of law arising from an order passed by the Income-tax Appellate Tribunal (ITAT), Ahmedabad Bench C. The ITAT had decided an appeal filed by the assessee, Abhishek Corporation, against the order of the CIT. The dispute involved additions made by the Assessing Officer (AO) based on a search and seizure operation conducted on an architect and builder, Madhavji Patel. A paper seized from Madhavji Patel suggested that Uttamchand Jain purchased two flats at Rs. 455 per sq. ft., leading the AO to add Rs. 1,88,59,400/- to the assessee's income. The assessee declared an undisclosed income of Rs. 30 lacs.

What did the High Court hold?

The High Court held that no referable question of law arose from the ITAT's order. Regarding the first issue, the Tribunal observed that no fact contrary to the record was stated by the assessee, nor was any additional evidence produced, making Rules 10 and 29 of the Appellate Tribunal Rules inapplicable. The Tribunal distinguished a new plea from new evidence. Concerning the second issue, the Tribunal found the premise of the question to be incorrect, as the Department failed to prove the assessee's claim for extra expenditure was incorrect. Furthermore, no unaccounted assets or investments exceeding Rs. 30 lacs were found during the search. The Tribunal noted that the agreement for flats did not refer to the price of Rs. 455 per sq. ft. mentioned on top, and Uttamchand Jain denied paying any premium. The ITAT considered the assessee's declared income of Rs. 30 lacs and calculated the profit at 1.31% on total receipts of Rs. 2.65 crores, amounting to Rs. 3,43,672/-, which was not disputed by the Revenue. The Tribunal also noted the absence of material indicating huge investments by the assessee. Therefore, the Tribunal's decision was based on the appreciation of evidence on record.

What were the issues?

1. Whether on facts and in the circumstances of the case, the ITAT was justified in law in admitting a new plea contrary to the facts on record that the net profit in respect of supervision charges should be linked to the receipts of booking of flats to the tune of Rs. 2.63 crores, contrary to the provisions of Rule 29 read with Rule 10 of the Appellate Tribunal Rules and to base its finding thereon? - Assessee's contention: Not recorded. - Revenue's contention: The ITAT admitted a new plea contrary to facts and rules, specifically Rule 29 and Rule 10 of the Appellate Tribunal Rules. 2. Whether on the facts and circumstances of the case, the ITAT, having held that the assessee has received unaccounted receipts, was justified in law in holding that the assessing officer has to discharge the onus in respect of on-money by showing that the assessee has invested Rs. 1,58,59,400/- out of such receipts, whereas the claim of the assessee for extra expenditure was found to be incorrect? - Assessee's contention: Relied on the decision in CIT vs. President Industries (Income-tax Application No. 53 of 1999) by the Gujarat High Court, which held that sales alone do not represent income and that the excess over cost is profit, requiring a finding of investment by the assessee. - Revenue's contention: The AO was justified in demanding proof of investment from the assessee for the unaccounted receipts, especially when the assessee's claim for extra expenditure was found incorrect.

Which sections of the Income-tax Act were involved?

Section 256(2),Section 132(1),Section 132(AA)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX APPLICATION No 272 of 1999

For Approval and Signature:

Hon'ble MR.JUSTICE B.C.PATEL and MR.JUSTICE P.B.MAJMUDAR ============================================================ 1. Whether Reporters of Local Papers may be allowed : YES to see the judgements?

2.

To be referred to the Reporter or not? : YES

3.

Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO

The order continues below.

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