Telangana High Court
M/S. Hoe Leather Garments Ltd. vs Asst. Commissioner Of Income Tax on 6 January, 2025
THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE
AND
THE HON'BLE SRI JUSTICE J. SREENIVAS RAO
ITTA No. 199 of 2008
JUDGMENT:
(per the Hon'ble the Chief Justice Alok Aradhe)
Mr. A.V.A. Siva Kartikeya, learned counsel appears for
the appellant/assessee.
Mr. J.V. Prasad, learned Senior Standing Counsel for
Income-tax appears for the respondent/Revenue.
2. This appeal under Section 260A of the Income-tax Act,
1961 (hereinafter referred to as 'the Act') is directed against
order dated 16.11.2007 passed by the Income-tax Appellate
Tribunal (hereinafter referred to as 'the Appellate Tribunal').
The subject matter of the appeal pertains to the assessment
year 1989-90. The appeal has been admitted on the following
substantial question of law.
"Whether the Income-tax Appellate Tribunal is
justified in sustaining the addition of a sum of
Rs.25,88,026/- under the head of unproved cash
purchases?"
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The factual background for which aforesaid substantial
question of law arises for consideration need mention infra.
3. The assessee company is engaged in the manufacture
and export of finished leather. The assessee filed the return of
income on 20.12.1989 for the assessment year 1989-90
disclosing an income of Rs.4,37,738/- under the provisions of
Section 115J of the Act. The return filed by the assessee was
processed under Section 143(1)(a) of the Act and on
26.03.1992, the assessment was completed under Section
143(3) of the Act determining the total income of the assessee
at Rs.23,15,595/- under the regular provisions of the Act.
Being aggrieved by the additions made, the assessee filed an
appeal before the Commissioner of Income-tax (Appeals), who
partly allowed the appeal. Against the order passed by the
Commissioner of Income-tax (Appeals), the Revenue filed an
appeal before the Appellate Tribunal. The Appellate Tribunal
by an order dated 17.06.2002 set aside the order passed by the
Commissioner of Income-tax (Appeals) and remitted the
matter to the Assessing Officer to put the material collected
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and relied on by the Assessing Officer to the assessee and call
for the explanation and reframe the assessment.
4. In pursuance of order of remand, a notice under Section
143(2) of the Act was issued to the assessee and the material
collected and relied on by the Assessing Officer was put to the
assessee and the assessee was asked to furnish its explanation
as to why the purchases worth Rs.25,88,026/- should not be
disallowed as unproved cash purchases. The assessee
furnished a written reply on 11.02.2004. The assessee however
did not adduce any evidence in support of its claim except
filing copies of letters addressed to the Commissioner of
Income-tax (Appeals). The Assessing Officer therefore by an
order dated 18.03.2004, rejected the claim of the assessee and
the cash purchases claimed by it to the extent of
Rs.25,88,026/- were treated as unproved cash purchases. The
Assessing Officer also directed initiation of proceedings under
Section 271(1)(c) of the Act.
5. Being aggrieved, the assessee filed an appeal before the
Commissioner of Income-tax (Appeals). The Commissioner of
Income-tax (Appeals) by an order dated 16.02.2005 inter alia
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held that the assessee has failed to produce the stock register,
inward register and complete purchase details of
Rs.25,88,026/-. The Commissioner of Income-tax (Appeals)
further held that several details produced before him are in
Urdu for which English translations are not provided for by the
assessee. It was further noticed that the assessee has failed to
produce the primary documents before the Assessing Officer
during the reassessment proceedings and has not produced the
primary documents even during the appeal. Accordingly, the
Commissioner of Income-tax (Appeals) affirmed the finding
recorded by the Assessing Officer that purchases of
Rs.25,88,026/- are bogus and unverifiable purchases and
dismissed the appeal.
6. The assessee thereupon filed an appeal before the
Income-tax Appellate Tribunal. The Tribunal by an order
dated 16.11.2007 inter alia held that the assessee has neither
produced the stock register nor any other evidence to indicate
the receipt of raw material in the factory. It was noticed that
the authorities during the course of personal inspection found
that the assessee was maintaining the stock register for the
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subsequent year. The primary authority therefore concluded
that the assessee has withheld the best evidence available with
it from the knowledge of Assessing Officer. It was further held
that even before the Appellate Tribunal, the assessee has not
produced any material. The Appellate Tribunal dismissed the
appeal. Hence, this appeal.
7. Learned counsel for the assessee submitted that the
addition of a sum of Rs.25,88,026/- under the head of
unproved cash purchases in the facts and circumstances of the
case is unjustified. It is contended that the Assessing Officer
erred in making an addition of the aforesaid amount under the
head of unproved cash purchases which is contrary to the
record.
8. On the other hand, learned counsel for the Revenue has
submitted that no substantial question of law arises for
consideration in this appeal and the matter is concluded
against the assessee by findings of fact which are based on the
material available on record and by no stretch of imagination,
it can be said to be perverse.
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9. We have considered the submissions made on both sides
and have perused the record.
10. It is trite law that this Court in exercise of powers under
Section 260A of the Act cannot interfere with a finding of fact
unless and until the same is shown to be perverse (See Syeda
Rahimunnisa vs. Malan Bi by LRs 1 and Principal
Commissioner of Income Tax, Bangalore vs. Softbrands
India Private Limited 2).
11. The assessee in the course of reassessment proceeding
did not produce stock register or any other evidence to indicate
the receipt of raw material in the factory. Thus, the finding
with regard to the addition is based on meticulous appreciation
of evidence on record. The aforesaid finding of fact by no
stretch of imagination can be said to be either perverse or
based on no evidence.
12. For the aforementioned reasons, the substantial question
of law framed by this Court is answered against the assessee
and in favour of the Revenue.
(2016) 10 SCC 315
(2018) 406 ITR 513
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13. In the result, the appeal fails and is hereby dismissed.
Miscellaneous applications, if any pending, shall stand
closed. There shall be no order as to costs.
___________________
ALOK ARADHE, CJ
____________________
J. SREENIVAS RAO, J
6th JANUARY, 2025.
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