Commissioner Of Income Tax vs Goverdhan India (P) Ltd.
2008 Latest Caselaw 1364 Del

*             THE HIGH COURT OF DELHI AT NEW DELHI

%                                Judgment delivered on : 18.08.2008

+                          ITA No. 947/2008

COMMISSIONER OF                                          ..... Appellant
INCOME TAX.
                                  -versus-

GOVERDHAN INDIA (P) LTD                                 ..... Respondent

Advocates who appeared in this case:

For the Appellant          :     Ms. Prem Lata Bansal
For the Respondent         :     None

CORAM :-

HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE RAJIV SHAKDHER

1. Whether the Reporters of local papers may be allowed to see the judgment ?

2. To be referred to Reporters or not ?

3. Whether the judgment should be reported in the Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. The revenue has filed this appeal in respect of

assessment year 2001-02 against the order dated 30.11.2007 passed

by the Income Tax Appellate Tribunal in ITA No. 5679/Del/2004.

2. The assessee claimed to have made sales of 1315 shawls

of the value of Rs 50,36,600/- to one Ambrose International

Corporation. The Assessing Officer issued summons to Ambrose

International Corporation for confirmation with regard to the said

sales. The said party sent a copy of its accounts which disclosed that

it had purchased only 705 shawls of the value of Rs 28,19,400/-

from the assessee. The assessee was asked to explain this difference

of Rs 22,17,200/-. The assessee sent a letter dated 12.03.2004

wherein the assessee stated that the accounts maintained by Ambrose

International Corporation were not accurate and did not reflect the

true position. Some instances such as the cheque for Rs 4.50 lacs

bearing No. 291431 were mentioned in the said letter. More

importantly, the assessee requested the Assessing Officer, through

the said letter dated 12.03.2004 that if Ambrose International

Corporation did not certify its account as per the assessee's books,

then the said party be called to the Assessing Officer's office for the

purposes of cross examination by the assessee. The letter dated

12.03.2004 issued by the assessee was considered by the Assessing

Officer to be evasive and he rejected the same. It is also relevant to

note that no opportunity of cross examination of any

representative of Ambrose International

Corporation was given to the assessee.

3. Rejecting the pleas raised by the assessee, the Assessing

Officer treated the entire amount of Rs 22,17,200/- as unexplained

credit and added the same to the taxable income of the assessee.

Being aggrieved, the assessee preferred an appeal before the

Commissioner Income-tax (Appeals), who confirmed the addition

made by the Assessing Officer.

4. The assessee took the matter further in appeal before the

Tribunal. After considering all the facts and circumstances of the

case, the tribunal deleted the additions made by the Assessing

Officer. In particular, the tribunal noted that the assessee's accounts

had been audited and that the assessee had filed all its details. There

was no material on record to suggest any defect found by the

Assessing Officer in the purchases made by the assessee which had

been sold during the relevant year. Importantly, the tribunal

returned a finding that copies of sale bills were produced by the

assessee before the Assessing Officer and those bills had been

counter-signed by the said party (Ambrose International

Corporation). The tribunal concluded that the sales, thus stood

confirmed and had been made to a person who was identifiable.

After noting that the assessee had made a request for cross

examination, which had been denied by the Assessing Officer, the

tribunal held that the assessee's reply dated 12.03.2004 which

carried such request was not evasive. On facts also the tribunal held

that since the Assessing Officer could not point out any defect in the

books of accounts maintained by the assessee, the Assessing Officer

ought not to have made the addition purely on the basis of

presumptions. The tribunal also noted that the sales shown by the

assessee could not rejected by merely relying upon a copy of the

accounts submitted by the third party particularly where a serious

objection had been raised with regard to the authenticity of the said

accounts. This assumes greater significance because the assessee

had requested for cross examination of the third party and such

request had not been allowed by the Assessing Officer.

5. In such circumstances, we find ourselves to be in

agreement with the findings returned by the Tribunal and the

conclusions arrived at by them. The Assessing Officer ought not to

have relied upon the copy of the accounts submitted by Ambrose

International Corporation, when the same were disputed by the

assessee as not reflecting the true and correct position and

particularly when the assessee's request for cross examining the

representative of Ambrose International Corporation was not

allowed.

6. Before parting with this appeal, we would like to record

that the learned counsel for the appellant sought to raise the issue

that there was some discrepancy between the amount reflected in the

balance sheet under the head 'sundry debtors' and the balance

shown in the accounts of Ambrose International Corporation in the

books of the assessee. However, we cannot entertain this plea at this

stage, because such a plea was not raised before any of the

authorities below. No substantial question of law arises for our

consideration. The appeal is dismissed.

BADAR DURREZ AHMED, J

RAJIV SHAKDHER, J

August 18, 2008 mk