C.I.T. vs. M/S GUPTA ENTERPRISES BALODA BAZAR
What did the High Court hold?
The High Court held that the dispute regarding the method of estimation of sale value and estimation of income on the basis of sale value cannot be considered a substantial question of law. The Court referred to the guiding principles for entertaining an appeal under Section 260A of the Act, as defined in a catena of judgments by the Supreme Court and the Punjab & Haryana High Court. The Court agreed with the principles of law laid down in the cited judgments and was of the considered opinion that the dispute regarding the method of estimation of sale value and estimation of income on the basis of sale value cannot, by any stretch of imagination, be considered a substantial question of law. Since the ITAT had confirmed the findings of fact in the first appeal, and the questions raised by the appellant were not even questions of law, much less any substantial question of law, the appeal was dismissed at the admission stage. The Court did not decide on the merits of the other issues raised in the appeal.
What were the facts?
The assessee, for assessment year 1993-94, had its income estimated by the Assessing Officer (AO) at 5% of the sale value. As the assessee did not produce books of accounts, the sale value was determined by taking 2.5 times the amount of licence fee. The total income was assessed at Rs. 14,09,500/-. The Commissioner of Income Tax (Appeals) [CIT(A)] doubled the licence fee and assessed income at 3% of the estimated sale value. The assessee appealed this to the Income Tax Appellate Tribunal (ITAT). The ITAT, in its impugned order, dismissed the appeal. The Revenue has preferred this appeal to the High Court under Section 260A of the Income Tax Act, 1961.
What were the issues?
The High Court had to decide the following substantial questions of law: 1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in confirming the action of the CIT(A) in reducing the rate of estimation of the licence fee and net profit thereon for the period relevant during the last decade? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the interest accrued on FDRs was business income and not income from other sources? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the amount of unexplained assets was not admissible when computed on estimate basis? The Revenue's contentions were that both the appellate authorities were not justified in assessing the income of the assessee by applying a different mode than that applied by the AO. The Revenue relied on the principles laid down in a catena of judgments by the Supreme Court and the Punjab & Haryana High Court regarding entertaining an appeal under Section 260A of the Act, specifically concerning substantial questions of law.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
'^'' .:.-• 'l; T % :i;:^l::l^^;.^ ^ '""Bi: |. ' - >x •Sk •^w ^sr ';;qT;rff?ra, '^flwR, f5idi'yli,< VI sf^? 'V^! ('^'yf'v^) an^n'wtote' WTa^i^wqn? TwnR-aftdan^i <ftni?r^t*? 'RW^f "^f fa^ Tf^R^R ^3?fWT3II^( ,«I AB£;^'©JJS^is;& c"^mmi':s? "t«>V t l i 1 3 i S <3 -^: ii' of Ir OFHQ 1 <^X, [.aiDur. ie& sf,f^9ss K.tSStSOniSS.UtE M/s Gup-y In front Ralpur. iSlC'hBrsndra Mishrsii Fnt^rDrlsss- Malrs Road <'S<^ ^vS ^J Hospitai, Batoda Bazar, Shr! 5. Rajeshwar Rao, learjned counsel forthe appeiiant. Ths appeHant has prefsrre'l this appea! undsr Sectlon 26QA of ths Income Tax Act, 1961 on th|e following substantlal questions of w; •Whether, on the facts ^nd in the drcumstancss of i :he case, the Income justified in confirming reduclng the rate of est and net profit thereon the period relevant durila the iast decade?" Tax Appeilate Tribuna! is the action of the CIT(A) :imation of the iicence fee ivei 'rcentage fc •"' tK ^S/95—i1/2008—-l.00,i
.^••s" ^'. "i "I. \. '^ <tl, T XI-HC—78 ?^-4i<4iM^, gnl'y'is, (qoi'yy II*ICTI g,t,ie(,"——-•••—••——•• ••--•^200 + 3f1^T 'T^T (ipfg^qq) al^l w R!-I ^TT 3?TT^T sh*li<t) 'renw ^ifta an^r 2_ "Whether, on the facts atid in t the case, the Tribunai w ^ " ] g 3 Q i S81 1 OVV8 P CS O ii investment In fixed a' admissibie when tha computed on estlmate b;tsis?" ^ ' n'i«?l;rh.'s^hia^- ,--krt ^"hffit' ?'-(fn-S-c* -s vy u^ii'i^i'•'Uil LIIK ;d^lSs1 ci the case, the Tribunal Vi t.he Interest accrued on. and not income from "ot Briefly statsd, facts of thi respondent for the assessment y Assesslng Officer as 5% of tha not produce any books of accoun was done by taking -2 V2 times of| totai Income of ths assessee w< The appea! preferred by t't\ Commisslonei' of Income Tax (Ap| was doublsd and for the ourposl s^ i© amouni. W83 ssTimQtSG > appel!ant-Revenus has beeh disn) |id in the circumstances of •^s justlfled in hoiding that FDR.S was business income ;hersources"?" q)l*<t<»l<fh *1M<r?f'^'f^'iO <.P>1^1< i? sifin 3ii^i |is justified in holding that tccount of unexpiained |sets was not separatety let business income was pase are tnat tne income cr tne jear 1993-94 was estimated by the [ale vaiue. Slnce the assessee dld |ts and vouchers, estimaSion of sale |the iicence fee and accordingiy, the issessed at Rs.14,09,500/-. i^ Quyvv^u yy L{!^ 'Deai) snd the amount of llcence fee '& of estimatine income, 3% of the nr^f^rrA^ hv th' ssed by the impugned ordei
,f" ^ •:""-^ 1,,,,--''J •^Sj ^^ ^-fi^KftT, •g^tWR, fsj^iy^< sn^r Tra^ ('^P^^?) WT sn^r'gs?^ wnw^'ftgan^ ^ ^>i<<frt<i1-i 'mwif •Sft^ •(f^Egre iTaffliHan^i ..-. --3 L^di H^ij counsei ror tne app< ;ourts were not justifled !n asss ipplylng different mode than t |ant submits that both the appeilate ^slng the income of the assassas by was applied by the Assessing ^££;^,^. ..., Vi I IL.^i fll"V yve nave carsfuiiy gone tf iuastlons of law by the appei!ant|. •ne -dJ ^ i i ^h, ^*- A"^E ^ "' S ^ J .SUUsl^^'Li^s Ths icw as to what amounts, weli settied. The guidlng princi o substantiai quastjan^f law Is now )les, which are to ba jn view, '^-.-•?**^s. ••*^ wnsse entertainjng.an appeai unc defined in a catena of ju 'he Division Beni Co-aaeri Qf Taid ;r Section 260A of ths Act, are ct, aro wsl! r|ts by the Hon'bie 'Supreme Court. ths Punja|) & Haryana Court in the msttsrs of •.^^s,-- s< S^i •A-<^^ ts.^ r'^^.^^'? "^^s^ 'FCT'SS '^^*w f [^pui^^u ,'ft ^^MU^J ^y^ ^.?^€ ^ S^^' rffisni^^f'fi si has deait with the g^iiding princlples as to substantial question of law in para-15 of agreement vvith the prindples |of law iaid dovvn in the afc judgment and we are of the sjonsidered opinlon that the dispute rsgarding method of estimatioji of saie vatue and estjmetlon of income on the basis of saie va!de can, by no stretch of Imaginatlon, bs considered to be a substantlaE question oftaw. y ;,S
- i. 1-f '^..I ^h';-,..s.'; ' ^ 's^ "MTifRT^T, wai-M'i^, fsj^iyy: sn^r^^C'^qi^^) a^t -afi^ sittfl^ ir 'sfcfsn^r ^-f !^1*)I<1<<1*1 ^T^ff ^f l^ei' ^FaT'i^R ^afwisn^T For the nforesaid reasons, k^eping in vlew the guidlng prindpies of law iaid down !n the aforesai^ judgment, we do not flnd that the ippeiiant has been able to rais^ any substantial question of ia'w for Ijudlcatlon of the issue invoivjed in the present case. Sirr:e thi ncome Tax Appeilate Tribuni first appsal with c!ear finding i^f fact; the questions raised by thi appeliant, are not even questio; questlon of law. Accordingly, deserves to be dismissed at thel QISmiSS€:d, nas c< >ed thi p^Ss^^U Hl |s of iaw, much !ess any substantial :he appeal being vvithout substance admisslon stage itself and Is hereby M A"sA?sv/Si.r ^ i sij'¥f>^y^:'i ^ ^~.f^ -^^ --^. iF SS 10 COS1 Sd/- Dhirendra Mishra Judge Sd/- R.N. Chandrakar judge .lucige
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