M/S.SETHI RICE MILLS vs. THE COMMISSIONER OF INCOME TAX

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ITR/164/1999HC Punjab & HaryanaPHHC01038603199927 October 2009Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE GURDEV SINGH3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court answered both referred questions against the assessee and in favour of the revenue. The decision was based on a related order passed in ITR 165 of 1999. The court did not provide specific reasoning for each question in this excerpt, but the operative direction was to dispose of the reference accordingly. The principle derived is that the ITAT's decision on merits based on ex-parte orders of the CIT(A) is upheld, and that low yield or unexplained wastage can be a valid ground for invoking Section 145 and estimating income. No issues were expressly left undecided.

What were the facts?

This case involves a reference of questions of law by the Income Tax Appellate Tribunal (ITAT), Amritsar, to the High Court of Punjab and Haryana at Chandigarh, at the instance of the assessee, M/s Sethi Rice Mills, Kotkapura. The assessment year in question is 1990-91. The ITAT's order being referred is dated July 29, 1998, in ITA No. 138 (ASR)/1992. The dispute arises from ex-parte orders passed by the Commissioner of Income Tax (Appeals) on merits. The revenue was represented by Ms. Savita Saxena, Advocate, while none appeared for the assessee. The High Court disposed of the reference in view of a related order passed in ITR 165 of 1999.

What were the issues?

The High Court was asked to decide two questions of law: 1. Whether, considering the peculiar facts and circumstances, the ITAT was correct in deciding the appeal on merits based on ex-parte orders passed by the CIT(A) on merits? 2. Whether, on the facts and in the circumstances, low yield of finished goods or unexplained high shortage/wastage constitutes a valid ground for invoking Section 145 of the Income Tax Act, 1961, and making a suitable estimate of income on account of low yield and unexplained shortage? The assessee's contentions were not recorded as none appeared for them. The revenue's contentions were also not recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 145

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
ITR No. 164 of 1999 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No. 164 of 1999 (O&M) Date of decision: October 27, 2009 M/s Sethi Rice Mills, Kotkapura ...Appellant Versus The Commissioner of Income Tax, Patiala ...Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE GURDEV SINGH Present: None for the assessee. Ms. Savita Saxena, Advocate, for the revenue.

ORDER The Income Tax Appellate Tribunal, Amritsar, has referred the following questions of law for opinion of this Court, at the instance of the assessee, arising out of its order dated 29.7.1998 in ITA No. 138 (ASR)/ 1992 for the assessment year 1990-91:- “1. Whether as per peculiar facts and circumstances of the case, the ITAT is right in deciding the appeal on merit on the exparte orders passed by the CIT (A) on merit ?

2.

Whether, on the facts and in circumstances of the cases, low yield of finished goods or unexplained high shortage/wastage is a valid ground for invoking section 145 and making suitable estimate of income on account of low yield and unexplained shortage ?”

In view of the order passed today in ITR 165 of 1999 (M/s Kanwal Rice Mills Kotkapura Versus The Commissioner of Income Tax, Patiala), the questions referred are answered against the assessee and in favour of the revenue. Reference is disposed of accordingly. (ADARSH KUMAR GOEL) JUDGE October 27, 2009 (GURDEV SINGH ) prem

JUDGE Note:- Whether this case is to be referred to the Reporter .....Yes/No

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