Case Law Details
1. The Tribunal has referred the following question for opinion of this court :
“Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in law in deleting the addition of Rs. 52,254 added by the Income-tax Officer as the income of the assessee ?”
2. The facts leading to the present reference briefly stated are as follows :
3. The relevant assessment year is 1971-72. The assessee is doing business of manufacturing of spindles and machinery spare parts which are used in textile mills. During the course of assessment proceedings, it came to the notice of the Income-tax Officer that the assessee had alleged to have made some purchases of pig iron, scrap and spindle steels from M/s. Alwin Textile Traders, M/s. Brijesh Engineering Products, M/s. Shanker Textile Industries and M/s. Comet Commercial Corporation of Ahmedabad. The assessee was required to produce the parties with their books of account and passbooks, etc., for examination and also adduce all evidence which it liked to produce in support of its contention for the genuineness of the alleged purchases from the said parties.
4. In the meantime, the sales-tax authorities had carried on certain investigations which revealed that a racket of issuing bogus vouchers by the said parties was prevailing in the market. The Income-tax Officer also learnt from local inquiries that the parties were not available at the addresses given. Certain confessions were also recorded from Shri Mahendrakumar N. Patel, Proprietor of M/s. Alwin Textile Traders, Ahmedabad, and Shri Rasiklal Chandulal Parikh, Proprietor of M/s. Brijesh Engineering Products, Ahmedabad, before the Sales tax Officer admitting that no purchases and sales were really effected and the vouchers were bogus.
5. The Income-tax Officer found that though the purchases were claimed to have been made on credit basis, the payments were shown to have been made after substantial lapse of time after the date of purchase. On these considerations, the Income-tax Officer held that the transactions for the amount of Rs. 52,254 were bogus. The Income-tax Officer, therefore, treated the said amount as the income of the assessee and added the same for the purpose of assessment. Since the assessee had concealed the particulars of his income, the Income-tax Officer initiated penalty proceedings under section 271(1)(c) of the Income-tax Act and referred the matter to the Inspecting Assistant Commissioner.
6. The assessee challenged the order of assessment in appeal before the Appellate Assistant Commissioner. The Appellate Assistant Commissioner found that the assessee had not been able to produce the parties and, therefore, the burden was not discharged. He also found that the Income-tax Officer had sufficient material to disbelieve the purchase made from the said parties and, therefore, he held that the addition was justified and he confirmed the order of the Income-tax Officer.
7. Being aggrieved by the aforesaid order, the assessee went in second appeal before the Tribunal. It was urged on behalf of the assessee that the transactions in question were normal business transactions and the assessee had made payments by cheques. The parties did not come forward and if they did not come, the assessee should not suffer. However, on behalf of the Revenue, it was urged that detailed inquiries were made and thereafter the conclusion was reached. The Tribunal found that there was no evidence anywhere that these concerns gave bogus vouchers to the assessee. No doubt, there were certain doubtful features, but the evidence was not adequate to conclude that the purchases made by the assessee from the said parties were bogus. The Tribunal accordingly, did not sustain the addition retained by the Appellate Assistant Commissioner. Hence, at the instance of the Revenue, the aforesaid question has been referred to this court for opinion.
8. On a perusal of the order of the Tribunal, it clearly appears that whether the said transactions were bogus or not was a question of fact. The Tribunal has also pointed out that nothing is shown to indicate that any part of the fund given by the assessee to these parties came back to the assessee in any form. It is further observed by the Tribunal that there is no evidence anywhere that these concerns gave vouchers to the assessee. Even the two statements do not implicate the transactions with the assessee in any way. With these observations, the Tribunal ultimately has observed that there are certain doubtful features, but the evidence is not adequate to conclude that the purchases made by the assessee from these parties were bogus. It may be stated that the assessee was given credit facilities for a short duration and the payments were given by cheques. When that is so, it cannot be said that the entries for the purchases of the goods made in the books of account were bogus entries. We, therefore, do not find that the conclusion arrived at by the Tribunal is against the weight of evidence. In that view of the matter, we answer the question in the affirmative, that is, in favour of the assessee and against the Revenue. Accordingly, the reference stands disposed of with no order as to costs.
