COMMISSIONER OF IT vs. M/S DABUR BRICKS CO

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ITA/682/2005HC Punjab & HaryanaPHHC01076626200508 December 2011Author: MR. JUSTICE HEMANT GUPTA,MR. JUSTICE GURMEET SINGH SANDHAWALIA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court held that the ITAT's order was perverse and set aside. The court referred to a separate order passed in ITA No. 107 of 2005 (dated December 8, 2011) concerning the assessment year 1995-96, which dealt with similar issues and parties. The reasoning in that order, which found the ITAT's order to be unsustainable, was applied here. Consequently, the basis of the orders passed by the CIT(A) and the ITAT was deemed not sustainable. The questions of law were answered in favor of the revenue and against the assessees. The matters were remitted back to the Tribunal to decide the appeals afresh on merits according to law. No issue was expressly left undecided.

What were the facts?

The appeals were filed by the Commissioner of Income Tax, Rohtak, against orders passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench, pertaining to assessment year 1999-2000. The ITAT's orders were in favor of three assessees: M/s Dabur Bricks Company, M/s Delhi Bhatta Company, and M/s Dabur Tiles Company. A survey under Section 133A of the Income Tax Act, 1961, was conducted on the assessees' premises on August 11, 1998, leading to the discovery of loose papers. Based on these papers, the Assessing Officer estimated 70 lakh bricks manufactured and made additions to income by applying a net profit rate of 12%. The Assessing Officer rejected the assessees' books of accounts. The Commissioner of Income Tax (Appeals) applied a gross profit rate of 14.8%, as claimed by the assessees in their returns, and confirmed the assessment after adjustments. The ITAT accepted the assessees' appeals, relying on previous orders.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether on the facts and in the circumstances of the case, the order of the Hon'ble ITAT is perverse as it is based upon an incorrect assumption of fact? (Question of law and fact, concerning Section 260-A of the Income Tax Act, 1961). 2. Whether the finding of the Tribunal that the books of accounts of the assessee did not suffer from any infirmity is based on any cogent evidence? (Question of law and fact, concerning Section 260-A of the Income Tax Act, 1961). Contentions of the Revenue: The revenue argued that the ITAT's order was perverse, being based on an incorrect assumption of fact and lacking cogent evidence to support its finding that the assessees' books of accounts were free from infirmity. Contentions of the Assessee: The judgment does not record any specific contentions made by the assessees.

Which sections of the Income-tax Act were involved?

Section 133A,Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 08.12.2011 (i) ITA No. 682 of 2005 Commissioner of Income Tax, Rohtak …..Appellant vs. M/s Dabur Bricks Company …..Respondent (ii) ITA No. 683 of 2005 Commissioner of Income Tax, Rohtak …..Appellant vs. M/s Delhi Bhatta Company …..Respondent (iii) ITA No. 684 of 2005 Commissioner of Income Tax, Rohtak …..Appellant vs. M/s Dabur Tiles Company …..Respondent CORAM: - HON’BLE MR. JUSTICE HEMANT GUPTA HON’BLE MR. JUSTICE G.S.SANDHAWALIA Present: - Mr. Inderpreet Singh, Advocate for the appellant.

Mr. Sandeep Chabra, Advocate for respondent. HEMANT GUPTA, J This order shall dispose of the above mentioned Income Tax Appeals filed under Section 260-A of the Income Tax Act, 1961 (for short the ‘Act’) arising out the order dated 10.6.2005 passed by the Income Tax Appellate Tribunal, Delhi Bench, Delhi in Income Tax Appeal No. 2680/DEL/2003, Income Tax Appeal No. 3728/DEL/2003 and ITA No. 2679/DEL/2003 respectively pertaining to assessment year 1999-2000.

The revenue has claimed the following substantial questions of law: - i)

Whether on the facts and in the circumstances of the case, the order of Hon’ble ITAT is perverse as it is based upon incorrect assumption of fact.” ii)

Whether the finding of the Tribunal that books of accounts of the assessee did not suffer from any infirmity is based on any cogent evidence. A survey under Section 133A of the Act was conducted on the business premises of the assessee on 11.8.1998 when certain loose papers were found. On the basis of loose papers, the Assessing Officer estimated 70 lacs bricks were manufactured during the year. The return was processed and additions made on the basis of consumption of fire wood by applying net profit rate of 12%. The assessee produced the books of accounts but such books of accounts were rejected as unreliable. The Commissioner of Income Tax (Appeals) applied gross profit rate of 14.8%, the rate claimed by the assessee in their returns. After making adjustment, the assessment was confirmed accordingly. The Commissioner of Income Tax (Appeals) (for short the ‘CIT(A)’) relied upon the orders passed in the case of Commissioner of Income Tax Rohtak vs. M/s Dabur Bricks Company (Assessment Year 1995-96 subject matter of ITA No. 107 of 2005 decided on 8.12.2011 vide separate order) and accepted the assessee’s appeal.

The said order passed by the Tribunal has been found to be suffering from perversity and has been set aside by a separate order passed in ITA No. 107 of 2005 dated 8.12.2011.

Keeping in view the reasons recorded therein, the entire basis of the order passed by CIT(A) & Tribunal are also not sustainable.

Consequently, the questions of law as framed are answered in favour of the revenue against the assessee. The matter is remitted back to the Tribunal to decide the appeal afresh on merits according to law.

Disposed of. (HEMANT GUPTA) JUDGE (G.S.SANDHAWALIA) JUDGE 8.12.2011 preeti 3

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