COMMERSSIONER OF I T vs. SMT RADHA BAJAJ

1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. JUDGMENT (1) D.B. Income Tax Appeal No. 65/2000. Commissioner of Income Tax, Jaipur Vs. Smt. Radha Bajaj (2) D.B. Income Tax Appeal No. 64/2000. Commissioner of Income Tax, Jaipur Vs. Smt. Radha Bajaj (3) D.B. CROSS OBJECTION NO.22/2003. In D.B. Income Tax Appeal No. 65/2000. Commissioner of Income Tax, Jaipur Vs. Smt. Radha Bajaj (4) D.B. CROSS OBJECTION NO.21/2003. In D.B. Income Tax Appeal No. 64/2000. Commissioner of Income Tax, Jaipur Vs. Smt. Radha Bajaj DATE OF JUDGMENT : 14.09.2016 HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE BANWARI LAL SHARMA Mr. R.B. Mathur, for appellant-Department. Mr. Vivek Singhal, for the respondent-assessee. ***** BY THE COURT (Per Hon’ble Jhaveri, J.) 1. By way of these appeals, the Department has challenged the judgment and order of the Tribunal whereby the Tribunal has dismissed the appeals preferred by the Department and allowed the appeals preferred by the assessee against the order of the CIT (A) whereby the CIT

2 (A) has partly allowed the appeal of the assessee. The cross-objections have also been filed by the respondent- applicant. Since controversy raises identical questions of law and facts, all these cases are decided by this common judgment and order. 2. The facts giving rise to the appeals are that for the assessment years 1989-90 and 1997-98, block asseement year, the Assessing Officer has passed an order against the present respondent-assessee and estimated his income for the block assessment year. The operative part of the order reads as under: “Accordingly Rs. 29,28,920/- are taken as undisclosed income of the assessee on account of interest income on undisclosed advances of Rs. 42,34,000/- Asstt. Year Undisclosed income 92-93 Rs. 8,81,016/- 93-94 Rs. 10,40,675/- 94-95 Rs. 10,14,844/- 95-96 Rs. 9,91,147/- 96-97 Rs. 13,18,900/- Rs. 3,60,000/- 97-98 Rs. 11,40,088/- Rs. 16,37,440/- 98-99 (i.e. 1.4.97 to 17.9.97) Rs. 3,45,475/- Rs. 9,31,480/- Total Rs. 96+,61,065/- The income of the assessee for the block period is therefore, assessed at Rs. 96,61,065/- on which tax @ 60% comes to Rs. 57,96,639/-. Issue demand notice and challan. Also charge interest u/s 158BFA (1). Penalty proceedings for levy of penalty u/s 158BFA(2) are being initiated separately.”

3 3. Against the said order, an appeal was preferred and CIT (A) has partly allowed the appeal preferred by the assessee. Being aggrieved by the same, the assessee has preferred appeal as well as the Department has also preferred the appeal which was dismissed. Five questions of law were framed by the Department which read as under: (1) Whether, in the facts and circumstances of the case, the ITAT is correct in law in reducing the weight gain in soap manufacturing process from 15% to 7.5% without any basis or material on record ? (2) Whether in the fats and circumstances of the case, the ITAT was justified in interfering with the finding of the A.O. regarding weight gain in soap manufacturing process which was duly confirmed by the CIT (A) and the same was also supported by the documentary evidence as well as practical exercise done at the time of survey itself ? (3) Whether in the facts and circumstances of the case, the ITAT was justified in setting aside the addition of interest income on the ground that it was not received whereas the factual position was not in dispute that the loan was advanced and the interest income was undisclosed? (4) Whether in the facts and circumstances of the case, the ITAT was justified in setting aside the interest income when the limited dispute before it that it should be taxed on the accrual or receipt basis ? (5) Whether in the facts and circumstances of the case, when the assessee is maintaining books of accounts on mercantile basis then the interest should be calculated on accrual or receipt basis ?

4 3.1 While admitting the appeal, no substantial question of law was framed and cross-objections have also been preferred by the assessee. 4. We have heard the learned counsel for the parties. 5. Mr. Mathur has contended that the Assessing Officer after considering the evidence on record and the statement recorded and documents which were recovered during the search which were loose papers and on the basis of that the assessment was made on the basis of 15%. C.I.T. (A) has also gone into details and after considering, therefore, the Tribunal has seriously committed an error in allowing the ground No.1 and reasoning which are adopted from 1 to 3 are erroneous. 6. Counsel for the respondents has contended that the view taken by the Tribunal is just and proper and even the profit which has been estimated 7.5% required to be reduced to 6.48%. 7. The Tribunal while considering the reasoning in paragraph 13, held as under: “After due consideration of facts, we do not find much credibility in the report of Shri S.C. Singhal. Further, the publication of Rajasthan Chamber of Commerce giving

information

about

soap manufacturing is also distinguishable for the reasons that the quality of soap covered by the publication is different from the quality of soap manufactured by the assessee. This is evident not only from the comparative sales prices between the component mix of the two. In so far as the report of Rajasthan

5 Consultancy Organisation Ltd. Is concerned, we find that the organisation is sponsored by several Financial Institutions/Banks and all are public sector undertakings. Thus, this report is more credible/reliable. Moreover, the report is based on inspection of assessee’s place and actual physical verification of process and production. We do not accept the contention of the Id. D/R that this report should not be believed. However, considering the facts and said report, we hold that it would be fair and reasonable if the weight gain is adopted at 7.5% in the case of appellant. The AO has prepared the calculation of undisclosed income at page 19 of assessment order in a table taking the weight gain at 15%. We hereby direct the AO to recalculate the undisclosed income by adopting 7.5% in place of 15% in the said table. We hold accordingly.” 8. In our view, the view taken by the Tribunal is just and proper and no interference is called for. The substantial questions which have been raised, in our opinion, are appreciation of evidence of law on the basis of evidence on record. 9. In that view of the matter, all the issues are answered in favour of the assessee against the Department. 10. The appeals of the Department are dismissed. The cross-objections also stand disposed of accordingly. (Banwari Lal Sharma), J. (K.S. Jhaveri), J. /bm gandhi 87-90