THE COMMISSIONER OF INCOME TAX -III PUNE vs. A.H. DESAI AND CO

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ITXA/272/2011HC Bombay25 June 2012Bench: HON'BLE SHRI JUSTICE S.J. VAZIFDAR, HON'BLE SHRI JUSTICE M.S. SANKLECHA4 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that it was not inclined to admit the appeal on the first question, finding no reason to interfere with the discretion exercised by the Tribunal in remanding the matter. Regarding the second question, the Court found that it did not give rise to a substantial question of law as it involved an appreciation of evidence. The Court noted that the Tribunal had discussed the evidence in considerable detail before concluding that the disallowance by the AO and the enhancement by the CIT(A) were not in accordance with law. The Tribunal found that payments of over Rs. 78,00,000/- were made in cash, and while notices under Section 133(6) were issued, the identity of 9 out of 13 persons had been confirmed, and they acknowledged receiving payments. The books of accounts were also furnished. The Court agreed with the Tribunal's finding that these circumstances indicated that the major part of the expenditure was duly explained by the assessee and found no fault with the Tribunal's decision.

What were the facts?

This is an appeal under Section 260-A of the Income Tax Act, 1961, filed by the Commissioner of Income Tax-III, Pune (the appellant/revenue) against M/s. A.H. Desai & Co. (the respondent/assessee). The appeal challenges an order of the Income Tax Appellate Tribunal (Tribunal). The Tribunal had previously remanded an issue concerning an addition of Rs. 8,77,984/- made by the Assessing Officer (AO) on account of inflated expenses. Additionally, the Tribunal had deleted a disallowance of Rs. 15,65,678/- made by the AO and an enhancement of Rs. 28,41,476/- made by the Commissioner of Income Tax (Appeals) [CIT(A)] on account of bogus cash expenses. The assessee had challenged the enhancement made by the CIT(A).

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in remanding to the CIT(Appeals) the issue of addition made by the Assessing Officer on account of inflation of expenses amounting to Rs. 8,77,984/-? The revenue argued that the Tribunal was not justified in remanding the matter. 2. Whether, on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the disallowance made by the Assessing Officer of Rs. 15,65,678/- as well as the enhancement made by the CIT(A) to Rs. 28,41,476/- on account of bogus cash expenses? The revenue argued that the Tribunal was not justified in deleting the disallowance and the enhancement. The assessee challenged the enhancement made by the CIT(A).

Which sections of the Income-tax Act were involved?

Section 260-A,Section 133(6)

AI-generated summary — verify with the full judgment below

ITXA272.11 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 272 OF 2011 The Commissioner of Income Tax-III, Pune, ] PMT Building, “B” Wing, 3rd Floor, ] Swargate, Shankarsheth Road, Pune 411 037 ]... Appellant Versus M/s. A.H. Desai & Co., ] A/P Belwadi, Tal-Indapur Disc., Pune ]... Respondents Mr. Vimal Gupta for the Appellant. CORAM : S.J. VAZIFDAR, & M.S. SANKLECHA, JJ. MONDAY, 25

th JUNE, 2012

ORAL JUDGMENT : [Per S.J. Vazifdar, J.] 1. This is an appeal under section 260-A of the Income Tax Act, 1961. 2. The appellant re-framed the questions of law : (A) Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in remanding to the CIT SRP                                                                                                                                                           1/4 CNR No : HCBM020097592010 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:23

ITXA272.11 (Appeals) the issue of addition made by the Assessing Officer on account of inflation of expenses amounting to Rs.8,77,984/-? (B) Whether, on the facts and in the circumstances of the case and in law, the Hon'ble Tribunal was justified in deleting the disallowance made by the Assessing Officer of Rs.15,65,678/- as well as the enhancement made by the CIT(A) to Rs.28,41,476/- on account of bogus case expenses? 3. We are not inclined to admit this appeal on the first question raised as we find no reason to interfere with the discretion exercised by the Tribunal in remanding the matter on the issue. 4. The next question sought to be raised does not give rise to a substantial question of law. It involved an appreciation of evidence. SRP                                                                                                                                                           2/4 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:23

ITXA272.11 5. The respondents challenged the order of the Commissioner of Income Tax (Appeals) [CIT(A)] insofar as it enhanced the disallowance on account of expenses to the extent of Rs.28,41,476/- as against the disallowance of Rs.15,65,678/- made by the Assessing Officer. The Tribunal has discussed the evidence in considerable detail before coming to the conclusion that disallowance of the deduction by the Assessing Officer and the enhancement of the income by the CIT(A) was not in accordance with law. Some of the observations and findings of the Tribunal are as follows. Payments of over Rs.78,00,000/- were made in cash. Notices under section 133(6) were issued to verify the same. The construction work was at Ratnagiri and Nanded. The same was assigned to small sub-contractors who, in turn, had employed workers on daily wages. The remand report obtained by the CIT from the Assessing Officer furnished the details of the names of the persons, the nature of the work carried out by them and the payments received by them. The identity of 9 out of 13 persons had been confirmed. They acknowledged having received the payments. The books of accounts had been furnished. SRP                                                                                                                                                           3/4 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:23

ITXA272.11 6. The finding of the Tribunal is that these circumstances indicate that the major part of the expenditure was duly explained by the assessee. We are unable to fault the decision of the Tribunal disapproving the action of the Assessing Officer as also the CIT(A) in respect of the addition as well as the enhancement. 7. The appeal is, therefore, dismissed.

M.S. SANKLECHA, J. S.J. VAZIFDAR, J. SRP                                                                                                                                                           4/4 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 04:55:23 Powered by TCPDF (www.tcpdf.org)

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