M/S BHAGMAL SACHDEVA COTTON AN vs. THE COMMISSIONER OF INCOME TAX

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ITA/27/2000HC Punjab & HaryanaPHHC01045954200010 January 2020Bench: MR. JUSTICE AJAY TEWARI,MR. JUSTICE AVNEESH JHINGAN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the appeal involved a factual dispute concerning the valuation of stock, specifically the yield of cotton and cotton seeds. The Court found no illegality or error in the order of the Appellate Authority. The Appellate Authority had considered that the assessee did not maintain a stock register and that the books of accounts were maintained on an estimation basis. After examining various comparable cases, the Appellate Authority determined that the claimed shortage of 3.05% was on the higher side and reduced it to 2.55%. The Court found no substantial question of law to interfere with the Appellate Authority's findings. Therefore, the appeal was dismissed.

What were the facts?

The appeal was filed by M/s Bhagmal Sachdeva Cotton and Oil Mills against an order of the Tribunal which upheld a decision of the Commissioner of Income Tax (Appellate Authority). The dispute concerned the valuation of stock, specifically the yield of cotton and cotton seeds. The Appellate Authority had partly allowed the appellant's appeal, adjusting the yield of cotton seed. The appellant argued that the Tribunal erred in dismissing their appeal and upholding the Appellate Authority's order, asserting that the issue was purely factual with no substantial question of law. The Appellate Authority noted the absence of a stock register and estimation-based accounting, and after considering comparable cases, concluded that the claimed shortage of 3.05% was excessive, reducing it to 2.55%.

What were the issues?

1. Whether the Tribunal erred in dismissing the appeal and upholding the order of the First Appellate Authority, which involved a factual dispute regarding the valuation of stock (cotton and cotton seed yield)? (Question of mixed law and fact, concerning the interpretation and application of stock valuation principles under the Income Tax Act, 1961). Contentions: Assessee: The issue is purely factual, and there is no substantial question of law involved. The Appellate Authority's decision, which considered the lack of a stock register, estimation-based accounts, and comparable cases, was erroneous in its dismissal of the appeal. Revenue: The judgment does not record specific contentions for the revenue regarding this issue.

AI-generated summary — verify with the full judgment below

380 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-27-2000 (O&M) Date of decision : 10.01.2020 M/S BHAGMAL SACHDEVA COTTON AND OIL MILLS, KOTKAPURA THROUGH ITS PARTNER ...... APPELLANT VERSUS THE COMMISSIONER OF INCOME TAX, BATHINDA AND ANOTHER

...... RESPONDENTS CORAM : HON'BLE MR.JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE AVNEESH JHINGAN **** Present :- Mr. Alok Mittal, Advocate for the appellant. Mr. Rajesh Sethi, Senior Standing Counsel for the respondents. **** AJAY TEWARI, J. (

Oral

) 1. This appeal has been filed against order of Tribunal upholding that the Appellate Authority (whereby the appeal of the appellant had been partly allowed). The issue relates to the valuation of stock vis-a-vis yield of cotton as well as yield of cotton seeds. The Commissioner of Income Tax (Appellate Authority) held as under:- “3.3 I have given careful consideration to the entire matter and I find that although the learned counsel has mentioned that the yield of cotton seed of Ganesh Cotton Factory was 66.84%, no comments have been offered in respect of other comparable cases mentioned in the asstt. order. In the case of the appellant the yield of cotton shown at 31.45% has been accepted being fair and reasonable but yield of cotton seed is certainly on the lower side and this is clear from the shortage claimed at 3.05%. The shortage in respect of cotton ginning normally does not exceed 2.50% and SHABHA 2020.01.22 15:51 I attest to the accuracy and integrity of this document

ITA-27-2000 (O&M) -2- even much lower shortage has been shown by other factories namely M/s Mittal Cotton Factory and M/s Shiv Cotton & General Factory. As such it would be fair and reasonable to take the yield of cotton at 66% and this would reduce the shortage to 2.55%. By taking the yield at 66%, the yield of cotton seed shown less would work out to 318.50 qtls. and its value at Rs. 325 per qtl. comes at Rs. 1,03,512/-. The addition is confirmed to this extent and the appellant gets relief of Rs. 1,04,488/-.” 2. Learned counsel for the appellant submits that the Tribunal erred in dismissing the appeal and upholding the order of the First Appellate Authority. The issue raised in the present appeal is factual. There is no legal question much less substantial question of law involved. The Appellate Authority considering the facts that no stock register was maintained and that the books of accounts were maintained on estimation, considering the evidence in entirety and after accounting various comparable cases held that the shortage claimed of 3.05% was on higher side and the shortage was considered at 2.55%. 3. No illegality or error has been pointed out in the order of the Appellate Authority. 4. Hence, no interference is called for. The appeal is dismissed. ( AJAY TEWARI ) JUDGE (AVNEESH JHINGAN ) 10th January, 2020 JUDGE shabha Whether speaking/reasoned : Yes/No Whether Reportable : Yes/No SHABHA 2020.01.22 15:51 I attest to the accuracy and integrity of this document

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