M/S.KALLIYATH WIRE DISTRIBUTORS vs. COMMISSIONER OF INCOME TAX

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ITA/57/2011HC KeralaKLHC01026405201105 March 2012Author: HONOURABLE MR. JUSTICE BABU MATHEW P.JOSEPH,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the questions raised in both appeals were purely based on findings of fact recorded by the Tribunal. Regarding the first issue, the Court found no question of law arising from the Tribunal's order concerning the reliance on documents seized from the employee's residence to estimate the volume of business and profit. The Court noted that the seized vouchers bore the name of the appellant. For the additional issue raised in ITA No. 5/2012, pertaining to the disallowance of a purchase claim of 6 MT, the Court also concluded that it was merely a finding on facts and did not give rise to any substantial question of law. Consequently, both appeals were dismissed.

What were the facts?

The appeals were filed by M/s. Kalliyath Wire Distributors against the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, dated May 31, 2010. The assessment year under consideration was 1991-92. The ITAT's order was challenged before the High Court. The appeals stemmed from the assessment order dated March 25, 1994, issued by the Income Tax Department and the subsequent order dated January 22, 2008, by the Commissioner of Income Tax (Appeals). The core of the dispute involved the reliance on documents seized from an employee's residence to estimate the volume of business and profit, and the disallowance of a purchase claim.

What were the issues?

1. Whether the Tribunal erred in law by upholding the reliance on documents seized from an employee's residence for estimating the appellant's volume of business and profit, thereby raising a substantial question of law? (Section 68 of the Income Tax Act, 1961, and principles of evidence). Assessee's Contention: The assessee argued that the documents seized from an employee's residence, which contained the appellant's name, were used to estimate business volume and profit. The assessee implicitly questioned the legality and evidentiary value of such reliance. Revenue's Contention: The revenue supported the Tribunal's finding that the documents seized from the employee's residence were validly used to estimate the business and profit of the appellant. 2. Whether the Tribunal erred in law by upholding the disallowance of a purchase claim of 6 MT from another company, thereby raising a substantial question of law? (Principles of evidence and allowability of business expenses). Assessee's Contention: The assessee challenged the disallowance of the purchase claim, arguing it was a finding of fact that did not give rise to a substantial question of law. Revenue's Contention: The revenue supported the Tribunal's decision to disallow the purchase claim.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR & THE HON'BLE MR. JUSTICE BABU MATHEW P.JOSEPH MONDAY, THE 5TH DAY OF MARCH 2012/15TH PHALGUNA 1933 ITA.No. 57 of 2011 ( ) ---------------------- AGAINST ORDER IN ITA.535/COCH/2008 DATED 31/05/2010 of I.T.A.TRIBUNAL,COCHIN BENCH APPELLANT(S)/APPELLANT: ----------------------- M/S. KALLIYATH WIRE DISTRIBUTORS, OPP. R.K. MISSION HIGH SCHOOL, PANNIANKARA CALICUT. BY ADVS.SRI.ANIL D. NAIR SMT.NIVEDITA A.KAMATH RESPONDENT(S)/RESPONDENT: ------------------------- COMMISSIONER OF INCOME TAX, KOZHIKODE, PIN - 673 001. BY SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) BY SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 05-03-2012, ALONG WITH ITA.5/2012, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA NO.57/2011 APPENDIX APPELLANT'S EXHIBITS ANNEXURE-A : COPY OF ASSESSMENT ORDER FOR THE YEAR 1991-92 DATED 25/03/1994 ISSUED BY THE INCOME TAX DEPARTMENT TO THE APPELLANT. ANNEXURE-B : COPY OF ORDER DATED 22/01/2008 FOR THE YEAR 1991-92 ISSUED BY THE COMMISSIONER OF INCOME TAX (APPEALS) TO THE APPELLANT. ANNEXURE-C : COPY OF ORDER OF THE INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, COCHIN DATED 31/05/2010 ISSUED TO THE APPELLANT. // TRUE COPY // PA TO JUDGE. jg C.N.RAMACHANDRAN NAIR & BABU MATHEW P. JOSEPH, JJ. .................................................................... I.T.A.Nos.57 of 2011 & 5 of 2012 .................................................................... Dated this the 5th day of March, 2012.

J U D G M E N T Ramachandran Nair, J. Heard Shri.Anil D.Nair, learned counsel for the appellant, and learned Standing Counsel for the Revenue. After hearing both sides and after going through the records including the Tribunal's order, what we notice is that questions raised are purely based on findings on facts recorded by the Tribunal. The first question relates to reliance of documents seized from the employee's residence at the time of search. The person searched was an employee and vouchers with name of the appellant were seized, based on which volume of business and profit were estimated. We do not find any question of law arising from the order of the Tribunal on this issue. The additional issue raised in ITA No.5/2012 pertains to disallowance of purchase claimed to the extent of 6 MT from another company, which again challenged by the appellant being only findings on facts, does

ITA Nos.57/2011 & 5/2012 -2- not give rise to any substantial question of law. We, therefore, dismiss both the appeals.

(C.N.RAMACHANDRAN NAIR, JUDGE) (BABU MATHEW P. JOSEPH, JUDGE) jg

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