C I T AJMER vs. M/S SELECTION SYNTHETICS LTD

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ITA/41/2006HC RajasthanRJHC01010146200619 April 2006Bench: RAJESH BALIA,RAJENDRA PRASAD VYAS3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose for consideration in the appeal. Regarding the rejection of books of account under Section 145, the Court found that the CIT(Appeals) and the Tribunal had considered relevant factors such as the volume of business, maintenance of accounts, and variations in price and production levels. Their finding that there were insufficient grounds to reject the books of account was a question of fact. Similarly, the disallowance of vehicle expenses and depreciation was also deemed a finding of fact, as the authorities found no material to suggest personal user, and the company's accounts were maintained in accordance with the Companies Act. Therefore, as both issues involved findings of fact, the appeal was dismissed.

What were the facts?

The Revenue, represented by the CIT, Ajmer, filed an appeal before the Rajasthan High Court at Jodhpur against the judgment of the Income Tax Appellate Tribunal, Jodhpur Bench. The appeal concerned Assessment Year 1997-98 and challenged the Tribunal's order which upheld the CIT(Appeals)'s decision. The CIT(Appeals) had set aside the Assessing Officer's order passed under Section 145 of the Income Tax Act, 1961, which had rejected the books of account of M/s Selection Synthetics Ltd. The CIT(Appeals) also reversed the disallowance of vehicle expenses and depreciation made by the Assessing Officer. The High Court was considering whether substantial questions of law arose from the Tribunal's order.

What were the issues?

1. Whether the High Court should entertain the appeal as a substantial question of law arises concerning the rejection of the assessee's books of account under Section 145 of the Income Tax Act, 1961. The Revenue contended that the Assessing Officer's rejection of the books of account was valid. The assessee argued that the CIT(Appeals) and the Tribunal correctly found no sufficient grounds for rejection, considering the volume of business, maintenance of accounts, and comparison with previous years' data. 2. Whether a substantial question of law arises regarding the disallowance of vehicle expenses and depreciation. The Revenue argued for disallowance. The assessee contended that the CIT(Appeals) and Tribunal rightly allowed these expenses, as there was no material to suggest personal user, especially given the company's accounts were maintained as per the Companies Act.

Which sections of the Income-tax Act were involved?

Section 145

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR JUDGMENT CIT, Ajmer Vs. M/s Selection Synthetics Ltd., Bhilwara. D.B. INCOME TAX APPEAL NO.41/2006 against the judgment dt.9.5.2005 passed by Income Tax Appellate Tribunal, Jodhpur Bench, Jodhpur in ITA No.365/JU/2004 for Asstt. Year 1997-98 Date of judgment : 19th April, 2006 PRESENT HON'BLE MR.JUSTICE RAJESH BALIA HON'BLE MR. JUSTICE R.P. VYAS Mr. K.K. Bissa for the appellant. _____ BY THE COURT:- (PER HON'BLE RAJESH BALIA, J.) Having heard learned counsel for the appellant, we are of the opinion that no substantial question of law arise for consideration in this appeal. The question suggested by the appellant – Revenue relates to setting aside the order passed under Section 145 of the Act by the Assessing Officer rejecting the books of account.

2 The CIT (Appeals) after taking into account the volume of business, the maintenance of books of account, the variation in level of price and level of production from month to month and comparing with the corresponding datas of the previous years came to the conclusion that it was not a case where company's books of accounts duly registered with the Registrar of Companies could be rejected and, therefore, order under Section 145 of the Act was set aside. Whether the books of account are such according to which profit and gain of business could be correctly determined or the same is ordinarily a question of fact. The CIT (Appeals) and the Tribunal having found that there did not exist sufficient ground for rejecting the books of accounts does not give rise to any question of law. Similarly, the dis-allowance on account of vehicle expenses and depreciation on the vehicle by the Assessing Officer was not countenanced by the CIT (Appeals) and the Tribunal inter alia on the ground that there is no material to suggest that the vehicle expenses and depreciation thereon had any element of personal user, as the

3 matter relates to the books of account of a private limited company where accounts are maintained in accordance with the provisions of Companies Act, is a finding of fact. In our opinion, basically both the questions sought to be raised by the Revenue cannot be said to be substantial questions of law. Therefore, the appeal fails and is hereby dismissed. [ R.P. VYAS ], J. [ RAJESH BALIA ], J. babulal/

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