THE COMMISSIONER OF INCOME TAX vs. SHRI SARDAR SINGH and PARTY

ITA/140/2006HC RajasthanRJHC01018437200612 December 2006Author: RAJESH BALIA,GOPAL KRISHAN VYAS2 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT's finding, which upheld the reduction in additions made by the assessing officer, was a finding of fact. The Court relied on its previous decisions in DB Income Tax Appeal No.72/2005 (Commissioner of Income Tax, Udaipur Vs. M/s. Om Prakash Mula Ram & Party) and DB Income Tax Appeal No.65/2005 (Commissioner of Income Tax, Udaipur Vs. M/s. Sukh Dev Kailash Chandra & Party). In those cases, similar reductions made by the assessing officer for like reasons were held not to give rise to any substantial question of law. Therefore, the High Court found no substantial question of law arising from the ITAT's order. The appeal was dismissed.

What were the facts?

This appeal by the Revenue challenges an order of the Income Tax Appellate Tribunal (ITAT), Jodhpur Bench, dated June 2, 2005. The ITAT had upheld the order of the Commissioner of Income Tax (Appeals), which reduced additions made by the assessing officer to the assessee's income for assessment year 1996-97. The assessee, a licensee for dealing in alcohol, incurred significant payments: Rs. 1,26,05,326/- for a shortfall in lifting contracted liquor and Rs. 47,64,557/- for a shortfall in guarantee money for IMFL and beer. The ITAT considered these losses and found the declared gross profit rates for country liquor and IMFL to be better than comparable cases, justifying the reduction in additions.

What were the issues?

1. Whether the Tribunal's finding that the reduction in additions made by the assessing officer was in order, considering the assessee's business losses, gives rise to a substantial question of law? (Mixed question of law and fact, relating to the interpretation and application of provisions concerning assessment of income). Assessee's contentions: Not recorded in the judgment. Revenue's contentions: The Revenue argued that the ITAT's decision to uphold the reduction in additions, despite the assessee incurring substantial payments for shortfalls, was erroneous and should give rise to a substantial question of law. The Revenue likely contended that these payments were not genuine business losses or that the assessing officer's additions were justified based on the facts. The judgment does not explicitly state the specific provisions or authorities relied upon by the Revenue.

AI-generated summary — verify with the full judgment below

1 D.B. INCOME TAX APPEAL NO.140/2006 (CIT, Udaipur Vs. Shri Sardar Singh & Party) Date of order : 12.12.2006 HON'BLE MR. JUSTICE RAJESH BALIA HON'BLE MR. JUSTICE GOPAL KRISHAN VYAS Mr. K.K. Bissa, for the appellant.

We have heard learned counsel for the appellant. This appeal is directed against the order of Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur dated 2.6.2005 by which the Tribunal has upheld the order of CIT (Appeals), reducing the additions made by the assessing officer in the income returned by the assessee for the assessment year 1996-97 inter alia on the ground that the assessee who is a licencee of the exclusive privilege of the State to deal in alcohol fit for human consumption, has paid a sum of Rs.1,26,05,326/- as short fall in payment for not lifting the contracted quantity of liquor and likewise, the assessee was made to pay Rs.47,64,557/- on account of short fall of guarantee money in respect of IMFL and beer. Taking into consideration, this loss, Tribunal found that in the business of country liquor as well as IMFL, the gross profit rate declared in both these cases would be far better than the 2 comparable cases of other licensee. Therefore, reduction in the additions was found to be in order and interference was not made. We are of the opinion that the finding is finding of fact and is squarely governed by decision rendered by this Court in DB Income Tax Appeal No.72/2005 (Commissioner of Income Tax, Udaipur Vs. M/s. Om Prakash Mula Ram & Party) and another decision in DB Income Tax Appeal No.65/2005 (Commissioner of Income Tax, Udaipur Vs. M/s. Sukh Dev Kailash Chandra & Party) whereby the reduction made by the assessing officer for the like reasons was held to be not giving rise to any substantial question of law. Accordingly, the appeal fails and is hereby dismissed. (GOPAL KRISHAN VYAS), J. (RAJESH BALIA), J. arun

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