COMMISSIONER OF INCOME TAX vs. HARIKISHANDAS DOLATRAM ADVANI

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 136 of 1988

For Approval and Signature:

Hon'ble MR.JUSTICE B.C.PATEL and Hon'ble MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

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CORAM : MR.JUSTICE B.C.PATEL and MR.JUSTICE D.A.MEHTA

Date of decision: 04/12/2001

ORAL JUDGEMENT (Per : MR.JUSTICE D.A.MEHTA)

1 The Income Tax Appellate Tribunal, Ahmedabad Bench 'C' has referred the following question at the instance of the Commissioner under the Income Tax Act, 1961 (hereinafter referred to as 'the Act').

"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in allowing reduction of Rs.24,173/- representing cash credit ?"

2 The assessee is also in cross reference and at the behest of the assessee, the following question has been referred :

"Whether, on the facts and in the circumstances of the case the Tribunal was right in law in holding that the assessee was not entitled to the benefit of Circular No.220 dated 31st May,1977 in respect of the payment of Rs.89,157-50?"

3 For assessment year 1980-81, the Income Tax Officer made addition to the extent of Rs.24,173/- as representing unexplained cash credit. He also made addition to the extent of Rs.31,500/- as estimated business income. Furthermore, invoking the provision of Section 40A(3) of the Act, he disallowed Rs.89,157/- being payment made in cash.

4 The assessee went in appeal before the Commissioner (Appeals) who deleted the addition in relation to cash credit by stating that as the addition made under section 40A(3) of the Act to the extent of Rs.89,157/- was being confirmed, and also addition relating to estimated business profit to the extent of Rs.31,500/- was being confirmed, it was appropriate that cash credit totalling Rs.24,173/- would stand included in the larger addition and no separate addition was therefore required to be made.

5 The Tribunal confirmed the order of Commissioner (Appeals). In the aforesaid circumstances, the revenue is in reference in relation to the addition of Rs.24,173/- while the assessee is in reference in relation to addition of Rs.89,157/- made by invoking provision of Section 40A(3) of the Act.

6 In so far as addition of Rs.89,157.50 relating to payments made in cash is concerned, the Commissioner (Appeals) found that Circular No.220 issued by the Central Board of Direct Taxes could not be availed of by the assessee as the requirements stipulated in the said circular were not fulfilled. The Tribunal has confirmed this finding of the Commissioner. In our view, these are findings recorded concurrently by the two Appellate Authorities after appreciation of evidence and facts on record.

7 We have heard Mr.B.B.Nayak, learned Counsel for the revenue. Though served none appears on behalf of the assessee. On going through the order of the Tribunal, it is not possible to take a different view of the matter and we find no infirmity in the reasoning adopted by the two appellate authorities after appreciating the facts and evidence on record. Both the appellate authorities have applied the principle of telescoping which is a well recognized principle in relation to additions pertaining to same assessment year as regards the addition regarding cash credits. As regards the addition under section 40A(3) of the Act also there is nothing on record to take any different view in the matter.

8 In view of the aforesaid fact situation, the question referred to us at the instance of the Commissioner, is answered in the affirmative i.e. in favour of the assessee and against the revenue. The question referred to us at the instance of the assessee is answered in the affirmative i.e. in favour of the revenue and against the assessee.

9 The reference stands disposed of accordingly with no order as to costs. (B.C.Patel, J) (D.A.Mehta,J)

m.m.bhatt