CLASSY THE ANTIQUE DISIGNED FURNITURE vs. THE DEPUTY COMMISSIONER OF INCOME TAX

ITA/25/2012HC KeralaKLHC01023947201201 July 2016Author: HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU,HONOURABLE MR.JUSTICE ANTONY DOMINIC8 pages
AI SummaryDismissed

What were the facts?

The assessee, a partnership firm, declared losses for assessment years 2007-08 and 2008-09. Following a search under Section 132 of the Income Tax Act, notices under Section 153A were issued, and the assessee filed revised returns declaring losses. Assessments were made based on a partner's statement under Section 132(4). The Commissioner of Income Tax (Appeals) remitted the issue of branded item sales to the assessing officer. The assessee appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT directed the assessing officer to adjudicate bulk sales with an opportunity for hearing, confirming lower authorities' orders on other issues. The assessee filed these appeals before the High Court against the ITAT's order dated 21.10.2011.

What did the High Court hold?

The High Court held that the first question regarding the Section 132(4) statement had no substance. The Tribunal's order indicated that the statement was attested by witnesses, not retracted, and the lower authorities were satisfied that Sri. Jabir was actively involved and conversant with the business. Evidence from a salesman suggested Sri. Jabir was running the business and deciding prices. Relying on the Apex Court's decision in Narayan Bhagwat Rao Gosavibalajiwale v. Gopal Vinayak Gosavi & Others [AIR 1960 SC 100], the Tribunal held that a Section 132(4) statement is the best evidence, and absence of confrontation does not necessitate discarding it. Regarding the second question, the Court noted that the claim for interest and salary to partners was not raised before the assessing officer or the first appellate authority and was only argued before the Tribunal. Furthermore, the claim could not be considered without supporting documents like the partnership deed. The Court found no illegality in the Tribunal's orders and confirmed them, answering the questions of law in favour of the Revenue.

What were the issues?

1. Whether, in the facts and circumstances, the Tribunal ought to have disregarded the statement recorded under Section 132(4) of a partner, particularly when the Managing Partner was not confronted with its contents (Question of law turning on Section 132(4)). Assessee's contention: The partner whose statement was recorded, Jabir, was a 22-year-old student not involved in the business, and his uncorroborated statement should not have been acted upon. The Managing Partner was not confronted. Revenue's contention: Not recorded. 2. Whether, in the facts and circumstances, the Tribunal ought to have allowed the claim of expenditure by way of interest to partners on their capital and salary to working partners (Question of law turning on provisions related to deductibility of expenses). Assessee's contention: The claim for interest and salary to partners should have been allowed. Revenue's contention: Not recorded.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 132(4),Section 143(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE DAMA SESHADRI NAIDU FRIDAY, THE 1ST DAY OF JULY 2016/10TH ASHADHA, 1938 ITA.No. 25 of 2012 () ---------------------- AGAINST THE ORDER/JUDGMENT IN ITA 125/COCH/2011 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 21.10.2011 APPELLANT(S)/APPELLANT: -------------------------------- CLASSY THE ANTIQUE DISIGNED FURNITURE

WOOD COMPLEX TOWER, NEAR AYURVEDA COLLEGE, CHANKUVETTY, KOTTAKKAL.

BY ADVS.SRI.ANIL D. NAIR SRI.J.R.PREM NAVAZ SMT.NIVEDITA A.KAMATH RESPONDENT(S)/RESPONDENT: ------------------------------------

THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2, KOZHIKODE-673001. R BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) R BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 01-07-2016, ALONG WITH ITA. 29/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

APPENDIX IN ITA.25/12 APPELLANTS' EXHIBITS: ANNEXURE A:OF THE ORDER OF ASSESSMENT FOR THE YAR 2007-08 ISSUED TO the APPELLANT. ANNEXURE B:OF THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEA

The order continues below.

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