M/S.P.K.ABDUL KHADIER &BROS. vs. THE COMMISIONER OF INCOME TAX

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ITR/189/1999HC KeralaKLHC01014157199910 December 2008Bench: HONOURABLE MR.JUSTICE HARUN-UL-RASHID,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no question of law arises from the order of the ITAT. The penalty was levied based on a clear finding of unaccounted purchase. The penalty imposed was the minimum penalty under Section 271(1)(c) of the Income Tax Act. The Court found no grounds to deviate from the ITAT's finding, which was based on evidence. The Court upheld the ITAT's order sustaining the minimum penalty. The question referred to the High Court was answered against the assessee and in favour of the revenue. No issue was expressly left undecided.

What were the facts?

During a search of the assessee's business premises, the department discovered unaccounted barrels. An addition was made to the assessment, equivalent to the value of these unaccounted purchases, calculated at Rs. 70 per barrel. This addition was sustained in appeals. The present reference case pertains to a penalty levied under Section 271(1)(c) of the Income Tax Act, which was partly confirmed by the Income Tax Appellate Tribunal (ITAT). The assessee contended that the excess stock found was covered by bought notes and purchase bills. The ITAT's order upheld the minimum penalty under Section 271(1)(c).

What were the issues?

1. Whether a question of law arises from the order of the Income Tax Appellate Tribunal (ITAT) sustaining a penalty under Section 271(1)(c) of the Income Tax Act, 1961, based on a finding of unaccounted purchases. Assessee's Contention: The assessee argued that the excess stock identified was supported by bought notes and purchase bills, implying that the purchases were accounted for and thus no penalty should be levied. The assessee implicitly contended that the ITAT's finding was erroneous. Revenue's Contention: The revenue's position, as reflected in the ITAT's order, was that there was a clear finding of unaccounted purchase, justifying the penalty. The revenue likely supported the ITAT's decision to uphold the minimum penalty.

Which sections of the Income-tax Act were involved?

Section 271(1)(c)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE HARUN-UL-RASHID WEDNESDAY, THE 10TH DECEMBER 2008 / 19TH AGRAHAYANA 1930 ITR.No. 189 of 1999() --------------------- AGAINST THE ORDER IN RA.304/COCH//1998 IN I.TA NO.325/COCH/94 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPLICANT(S): -------------- M/S. P.K. AB DUL KHADER & BROS., COCHIN BY ADV. SRI.C.KOCHUNNY NAIR SRI.S.ARUN RAJ RESPONDENT(S): --------------- THE COMMISSIONER OF INCOME TAX, COCHIN. ADV. SRI.P.K.R.MENON, SENIOR ADVOCATE THIS TAX REFERENCE HAVING BEEN FINALLY HEARD ON 10/12/2008 THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

C .N. RAMACHANDRAN NAIR & HARUN-UL-RASHID, JJ. -------------------------------------------- I.T.R. No. 189 OF 1999 -------------------------------------------- Dated this the 10th day of December, 2008 JUDGMENT Ramachandran Nair,J. Heard counsel appearing for the assessee and senior standing counsel appearing for the respondent-revenue. In the course of search in the business premises of the assessee, department noticed unaccounted quantity of barrels purchased. Consequently addition was made to the assessment which is equivalent to value of the unaccounted purchase of barrel taken at Rs. 70/- per barrel. Assessment stands sustained in appeals. This reference case is against the penalty levied under Section 271(1)(c) of the I.T. Act which is partly confirmed by the Tribunal. We do not find any question of law arising from the order of Tribunal, because penalty is levied based on the clear finding of unaccounted purchase and penalty levied is also minimum penalty under Section 271(1)(c) of the I.T. Act. Even though counsel for the assessee contended that excess stock noticed was covered by bought

2 notes and purchase bills, we do not think we can consider the evidence in reference case. We do not find any ground to deviate from the finding of the Tribunal, which is based on evidence. We therefore uphold the order of the Tribunal sustaining minimum penalty and consequently we answer the question referred against the assessee and in favour of the revenue. A copy of this judgment under the seal of the High Court and signature of Registrar General shall be forwarded to the Income-tax Appellate Tribunal, Cochin Bench. (C.N.RAMACHANDRAN NAIR) Judge. (HARUN-UL-RASHID) Judge. kk

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