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TAXAP/1140/2008 6/ 6 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No.1140 of 2008
===================================================
PESTKILL
PESTICIDES INDUSTRIES - Appellant(s)
Versus
THE
ASSISTANT COMMISSIONER OF INCOME TAX-Opponent(s)
===================================================
Appearance
:
M/S WADIA GHANDY &CO for
Appellant(s) : 1,
None for Opponent(s) :
1,
===================================================
CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HONOURABLE
MS.JUSTICE H.N.DEVANI
Date
: 22/03/2010
ORAL
ORDER
(Per
: HONOURABLE MR.JUSTICE D.A.MEHTA)
Appellant
assessee has proposed following two questions stated to be
substantial questions of law arising from order dated 21.01.2007
made by Income-tax Appellate Tribunal, Ahmedabad (the Tribunal) for
Assessment Year 1996-1997:
Whether
on the facts and circumstances of the case, the Appellate Tribunal
was right in law in holding that adverse inference can be drawn
under section 114 of the Indian Evidence Act if the assessee fails
to substantiate its claims even in a situation where it was
undisputed that the evidences for the said claim were not in the
possession of the appellant?
Whether
on the facts and circumstances of the case, the Appellate Tribunal
was right in law in disallowing the claim of jobwork charges?
The
assessee firm is a partnership firm whose assessment was originally
framed under Section 143(1)(a) of the Income Tax Act, 1961 (the Act)
on 10.03.1997. Subsequent thereto the proceedings were reopened
under Section 148 read with Section 147 of the Act in relation to an
amount of Rs.11,62,761/- towards unaccounted receipts based on the
difference between the total receipts as per the certificates of Tax
Deducted at Source (TDS certificates) amounting to Rs.63,50,467/-,
and the amount of total receipts shown in the Profit and Loss A/c.
at Rs.51,87,706/-.
Being
aggrieved, assessee carried the matter in appeal before Commissioner
(Appeals), who called for a remand report in light of the
explanation of the assessee that erstwhile partners of the assessee
firm were in possession of books of accounts and to reconcile the
discrepancy in the figure of total receipts, details may be called
for from the said persons, i.e. erstwhile partners. In the remand
report tendered by the Assessing Officer it was accepted that the
erstwhile partners had misplaced the books of account of the firm.
However, Commissioner (Appeals), placing reliance on the fact of
such discrepancy having been reconciled for subsequent Assessment
Year, i.e. 1997-98, allowed the appeal on this count but made an
addition on basis of an estimate to the tune of Rs.1,45,000/- by
estimating the sales and the rate of net profit.
Revenue
carried the matter in appeal before Tribunal and succeeded vide
impugned order dated 12.01.2007.
On
behalf of the appellant assessee learned advocate vehemently
submitted that Tribunal had erred in casting the onus on the
assessee by referring to provisions of Section 114 of the Indian
Evidence Act, 1872 when the onus was actually on the revenue to
point out that the amount of Rs.11,62,761/- could be added to the
total income as trading receipts. It was further submitted that due
to non-cooperation by erstwhile partners the assessee should not
suffer. Hence, the impugned order of Tribunal gave rise to
substantial questions of law as proposed, or any other questions
which the Court may deem fit.
The
facts are not in dispute. The assessee firm was carrying on job work
of repacking of pesticides for one limited company, named, Sandoz
(India) Limited. It appears that certain debit notes were raised by
the assessee firm and payment in respect thereof was made by the
limited company for which tax was deducted at source relatable to
the gross receipts of Rs.11,62,761/-. The debit notes were raised by
the assessee firm for ancillary work which the assessee was required
to carry out, beyond the job work as part of the contract between
the parties. Hence, admittedly, the receipts were on trading
account, regardless of whether they were part and parcel of contract
or not. The assessee had received the payment for which TDS
certificates had been issued by Sandoz (India) Limited and,
therefore, it is not possible to accept the stand of the assessee
that assessee is not aware about the nature of the receipts.
Availability or otherwise of the books of accounts, and so-called
non-cooperation of the erstwhile partners, would not make any
difference as the nature of receipts would have no bearing in
relation to either availability of books or
cooperation/non-cooperation of erstwhile partners, once it has come
on record that the receipts were relatable to ancillary work carried
out by the assessee firm for Sandoz (India) Limited.
The
Tribunal has rightly drawn an adverse inference in the facts of the
case in light of the fact that when the assessee has claimed that
the amount was not a taxable receipt the onus of substantiating the
said claim rested with the assessee. In the facts of the case such
onus remained undischarged. In the circumstances, there is no legal
infirmity in the impugned order of the Tribunal so as to warrant
interference.
In
absence of any question of law, much less a substantial question of
law, arising from the impugned order of the Tribunal, the appeal is
dismissed.
Sd/-
[D. A.
MEHTA, J]
Sd/-
[
H.N.DEVANI, J]
***
Bhavesh*
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