COMMISSIONER OF INCOME TAX HISAR vs. VISHWANATH CONTRACTOR

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ITA/711/2009HC Punjab & HaryanaPHHC01084849200905 February 2010Bench: MR. JUSTICE M.M. KUMAR,MR. JUSTICE JITENDRA CHAUHAN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arose for its consideration. The Court found that the ITAT's order was based on pure findings of fact. The Tribunal had affirmed the decision of the CIT(A) which directed the estimation of net income after admitting that the assessee's books were ingenuine. The CIT(A) had applied a net profit rate of 8% on total additions, citing comparable cases and a previous order for assessment year 2006-07 where an 8% net profit rate on gross receipts was directed. The High Court found no legal infirmity in the ITAT's order affirming the CIT(A)'s view and therefore dismissed the appeal. The operative direction was the dismissal of the appeal.

What were the facts?

The Revenue, Commissioner of Income Tax, Hisar, filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order dated May 25, 2009, passed by the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The appeal pertained to assessment year 2004-05 and concerned the respondent assessee, M/s Vishwanath, Contractor, Safidon, Jind. The ITAT had affirmed the order of the CIT(A) which directed the estimation of net income. The books of the assessee were admitted to be ingenuine. The CIT(A) had applied a net profit rate of 8% on total additions, citing comparable cases like Shri Subhash Kundu, Contractor, and an earlier order for assessment year 2006-07 where the Assessing Officer was directed to apply an 8% net profit rate on gross receipts. The Revenue's contention for a 30% to 40% imposition was found impractical.

What were the issues?

1. Whether a substantial question of law arises for consideration by the High Court in an appeal filed under Section 260A of the Income Tax Act, 1961, when the ITAT's order is based on pure findings of fact? Assessee's Contention: The assessee did not file any arguments as recorded in the judgment. Revenue's Contention: The Revenue contended that various questions of law would arise for consideration by the High Court. The Revenue argued for the imposition of a net profit rate of 30% to 40% on the estimated income, which was found to be practically impossible by the lower authorities.

Which sections of the Income-tax Act were involved?

Section 260A

AI-generated summary — verify with the full judgment below

ITA 711 of 2009 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT

CHANDIGARH. ITA No. 711 of 2009 Date of decision 5 .2.2010 Commissioner of Income Tax, Hisar ...Appellant Versus M/s Vishwanath, Contractor Safidon, Jind ... Respondent CORAM: HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present: Mr. Sanjeev Kaushik,Advocate for the appellant 1.To be referred to the Reporter or not ? 2.Whether the judgement should be reported in the Digest ? M.M.KUMAR, J. The instant appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 challenges order dated 25.5.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'A', Chandigarh in ITA No. 678/CHD/2008 and in CO No.31/CHD/2008 in respect of the assessment year 2004-05. The Revenue has claimed that various questions of law would arise for consideration of this Court. However, we find that there are pure findings of fact. The Tribunal has noticed that the books of the assessee were found to be ingenuine and the said fact was admitted. Accordingly, the Revenue was to calculate/ estimate the net income under the circumstances. The CIT(A) has cited comparable cases on identical fact like that of Shri Subhash Kundu, Contractor wherein a rate of 8% has been applied on total payments and has decided the matter by directing that net profit of 8% on the total additions be applied. The Revenue had argued the imposition of 30% to 40% which was found practically impossible. The Tribunal further noticed that even for the assessment year 2006-07, vide

ITA 711 of 2009 2 order dated 19.5.2008, the Assessing Officer was directed to apply net profit rate of 8% on the gross receipts. The decision in the case of Jora Singh was also cited to support the order of the CIT(A) where rate of 8% on total payments was applied. Accordingly, we do not find any legal infirmity in the order of the Tribunal affirming the view taken by the CIT(A). No question of law much less a substantive question of law would arise for determination of this Court warranting admission of the appeal. Accordingly, the appeal fails and the same is dismissed. (M.M.Kumar) Judge (Jitendra Chauhan) 5.2.2010 Judge okg

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