COMMISSIONER OF INCOME TAX v. AUTO BHARATI
[Citation -2007-LL-0417-1]

Citation 2007-LL-0417-1
Appellant Name COMMISSIONER OF INCOME TAX
Respondent Name AUTO BHARATI
Court ITAT
Relevant Act Income-tax
Date of Order 17/04/2007
Assessment Year 1986-87
Judgment View Judgment
Keyword Tags reference application • undisclosed income • additional income • bogus purchase
Bot Summary: On further appeal filed by the assessee, the Tribunal deleted the penalty. A reference application is filed by the Revenue under section 256(1) of the Act was rejected by the Tribunal. The Tribunal deleted the penalty, inter alia, on the ground that Shri C. N. Agrawal, an employee of the assessee who had stated that the bogus purchase bills were prepared at the instance of a partner of the firm has not been offered for cross examination. The Tribunal further held that the Department had not made any attempt to prove the statement of Shri Umakant Sharma, brother-in-law of the assessee to the effect that bearer cheques issued by the firm after encashment were paid to a third party. In our opinion, whether the Tribunal could delete the penalty on the aforesaid grounds is a question of law. In our opinion, there being no findings recorded by the Tribunal on this aspect of the matter, it will be open to the assessee to agitate this ground at the time of hearing the reference after the statement of the case is forwarded by the Tribunal. The Tribunal is directed to forward the statement on the aforesaid questions of law.


JUDGMENT judgment of court was delivered by J. P. Devadhar J. Heard learned counsel for respective parties. This is application filed by Revenue under section 256(2) of Income-tax Act, 1961. This court on April 15, 1998, has admitted application on following questions of law: (1) Whether, on facts and in circumstances of case, Tribunal was justified in holding that no penalty is imposable on addition of Rs. 4,52,485 made by Assessing Officer under section 271(1)(c) of Act? (2) Whether, on facts and in circumstances of case, Tribunal misdirected itself in law in basing its conclusion on irrelevant material and in ignoring other essential material on record? assessment year relevant herein is 1986-87. In this case during course of assessment proceedings, Assessing Officer noticed that assessee had introduced bogus purchase bills amounting to Rs. 4,52,484.85. When confronted with this fact, assessee filed fresh return of income declaring additional undisclosed income noticed under bogus purchase bills. Assessing Officer passed assessment order, accepted additional income and levied penalty under section 271(1)(c) of Act. On appeal filed by assessee, Commissioner of Income-tax (Appeals) upheld penalty. On further appeal filed by assessee, Tribunal deleted penalty. reference application is filed by Revenue under section 256(1) of Act was rejected by Tribunal. Hence, this application is filed by Revenue under section 256(2) of Act. In this case, quantum addition made on basis of revised return filed by assessee which represented bogus purchase bills has not been disputed by respondent-assessee. Tribunal deleted penalty, inter alia, on ground that Shri C. N. Agrawal, employee of assessee who had stated that bogus purchase bills were prepared at instance of partner of firm has not been offered for cross examination. Tribunal further held that Department had not made any attempt to prove statement of Shri Umakant Sharma, brother-in-law of assessee to effect that bearer cheques issued by firm after encashment were paid to third party. In our opinion, whether Tribunal could delete penalty on aforesaid grounds is question of law. Learned counsel for respondent-assessee contended that even otherwise, penalty cannot be sustained in present case because, after addition sustained by Assessing Officer, if one calculates gross profit in assessment year in question, i.e., in year 1986-87, it would come to 47.09 per cent. Whereas, in assessment year 1989-90 Assessing Officer himself has estimated gross profit at 18 per cent. In our opinion, there being no findings recorded by Tribunal on this aspect of matter, it will be open to assessee to agitate this ground at time of hearing reference after statement of case is forwarded by Tribunal. Accordingly, application is allowed. Tribunal is directed to forward statement on aforesaid questions of law. Rule is made absolute in above terms with no order as to costs. *** COMMISSIONER OF INCOME TAX v. AUTO BHARATI
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