C I T vs. M/S DABUR BRICKS CO.

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ITA/510/2007HC Punjab & HaryanaPHHC01073217200708 December 2011Bench: MR. JUSTICE HEMANT GUPTA,MR. JUSTICE GURMEET SINGH SANDHAWALIA3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court found that the order relied upon by the ITAT and passed by the CIT(A) and Tribunal was suffering from perversity. This order, in ITA No. 107 of 2005 dated 8.12.2011, had been set aside. Consequently, the High Court held that the entire basis of the orders passed by the CIT(A) and the Tribunal were not sustainable. The substantial question of law framed by the Revenue was answered in favour of the Revenue and against the assessee. The matter was remitted back to the Tribunal to decide the appeal afresh on merits according to law. No specific finding was made on the issue of coal consumption or the gross profit rate, as the matter was remanded.

What were the facts?

The Revenue (Commissioner of Income Tax, Rohtak) filed an appeal under Section 260-A of the Income Tax Act, 1961, against an order dated March 23, 2007, passed by the Income Tax Appellate Tribunal (ITAT), Delhi Bench. The appeal pertains to the assessment year 1996-97. A survey under Section 133A was conducted on the assessee, M/s Dabur Bricks Company, on August 11, 1998, where loose papers were found. The Assessing Officer estimated bricks worth Rs. 57,91,500/- were manufactured. The assessee's books of accounts were rejected as unreliable. Additions were made based on firewood consumption and a net profit rate of 6.57%. The CIT(A) dismissed the Revenue's appeal, relying on a Punjab & Haryana High Court judgment and applying a gross profit rate of 14% as claimed by the assessee. The Tribunal affirmed this order.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the order of the Hon'ble ITAT has erred in law by relying upon a decision of the Hon'ble Punjab & Haryana High Court, wherein no reference was made to the consumption of 20 MT of coal for the production of one lac bricks? Assessee's contentions: The judgment does not record any specific contentions made by the assessee. However, the CIT(A) and Tribunal relied on a previous High Court judgment and applied a gross profit rate of 14% as claimed by the assessee. Revenue's contentions: The Revenue argued that the ITAT erred in law by relying on a High Court decision that did not address the specific issue of coal consumption (20 MT for one lac bricks). The Revenue's initial assessment was based on estimated brick production and a net profit rate of 6.57% after rejecting the assessee's books.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 133A

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 ITA No. 510 of 2007 Commissioner of Income Tax, Rohtak …..Appellant vs. M/s Dabur Bricks 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 Appeal filed under Section 260-A of the Income Tax Act, 1961 (for short the ‘Act’) arising out the order dated 23.3.2007 passed by the Income Tax Appellate Tribunal, Delhi Bench, Delhi in Income Tax Appeal No. 3417/DEL/2006, pertaining to the assessment year 1996-97 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 has erred in law on relying upon the decision of Hon’ble Punjab & Haryana Court in which no

ITA Nos. 510 of 2007 reference about the consumption of 20 M.T. of coal for production of one lac bricks? “ 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 that bricks worth Rs. 57,91,500/- were manufactured during the year. The assessee produced the books of accounts but such books of accounts were rejected as unreliable. The return was processed and additions made on the basis of consumption of fire wood by applying net profit rate of 6.57%. The Commissioner of Income Tax (Appeals) (for short the ‘CIT(A)’) dismissed the appeal of the Revenue and relied upon a judgment of this Court passed in CIT vs. Kumar Maaini 262 ITR 380, wherein the revenue’s appeal raising substantial questions of law was dismissed. Learned CIT(A) applied gross profit rate of 14%, the rate claimed by the assessee in its returns. After making adjustment, the assessment was confirmed accordingly. The Tribunal affirmed the said order. The order relied upon and 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. 2

ITA Nos. 510 of 2007 Keeping in view the reasons recorded therein, the entire basis of the order passed by CIT(A) & Tribunal are also not sustainable. Consequently, the question of law as framed is 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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