The Principal Commissioner of Income-tax-I, Indore v. Akash Vijayvargiya
[Citation -2017-LL-0906-6]

Citation 2017-LL-0906-6
Appellant Name The Principal Commissioner of Income-tax-I, Indore
Respondent Name Akash Vijayvargiya
Court HIGH COURT OF MADHYA PRADESH AT INDORE
Relevant Act Income-tax
Date of Order 06/09/2017
Judgment View Judgment
Keyword Tags unexplained expenditure • reasonable opportunity • actual expenditure • question of law • estimate basis • total income
Bot Summary: To be a question of law involved in the case there must be first a foundation for it laid in the pleading and the question should emerge from the sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for a just and proper decision of the case. The question about number of guests attending the ceremony and the quantum of expenditure incurred on the ceremony are both questions of facts requiring evidence and / or material to support any addition made on that account. Learned counsel for the respondent submits that an appeal u/s 260A is maintainable only if the case involves substantial question of law and in the instant case since no substantial question of law is involved, the appeal itself is not maintainable because the decision of ITAT is based purely upon findings of fact regarding absence of any evidence with regard to number of persons attending the functions. Similarly the issue about expenditure incurred on marriage is also a question of fact to be decided on the basis of material / evidence about actual expenses incurred as such question whether the Respondent has actually incurred the expenses or not is also a question of fact. Such decision of the Appellate Tribunal therefore, does not involve any question -- 11 -- of law / substantial question of law. Keeping in view the aforesaid, this Court is of the considered opinion that the orders passed by CIT(A) and the ITAT in the light of the above settled legal position, does -- 13 -- not warrant any interference, the question as to how many persons attended the marriage function and the question about determination of such number of persons is undoubtedly a question of fact and the decisions of the Appellate authority deciding such questions clearly involves factual issues and does not involve any substantial question of law. Again the question whether any addition u/s 69C is warranted in the facts and circumstances of the case also revolves around factual findings and the decision of the ITAT that no addition is warranted in the facts and circumstances of the case does not involve any substantial question of law.


1 HIGH COURT OF MADHYA PRADESH : BENCH AT INDORE D.B.: HON'BLE MR. S. C. SHARMA AND HON'BLE MR. ALOK VERMA, JJ INCOME TAX APPEAL No. 58 / 2017 PRINCIPAL COMMISSIONER OF INCOME TAX-I INDORE Vs. AKASH VIJAYVARGIYA ***** ORDER (06/09/2017) PER : S. C. SHARMA, J :- present appeal has been filed by Principal Commissioner of Income Tax, being aggrieved by order dated 6/9/2011 passed by Income Tax Appellate Tribunal, Bench at Indore, in I.T.A.No. 15/Ind/2015 (Revenue's Appeal) for assessment year 2011-2012. Facts of case reveal that respondent assessee filed his e-Return of income on 16/9/2011 declaring total income of Rs.16,37,760.00. assessee derives income from salary and business. His case was selected for scrutiny and assessment was completed u/S. 143(3) of the Income Tax 2 Act, 1961 on 29/3/2014 with total assessed income of Rs.1,47,54,743.00 as against return income of Rs.16,37,760.00. assessing Officer made addition of Rs.1,31,16,983/- on account of unexplained expenditure u/S. 69C of the Income Tax Act, 1961 towards food and catering at time of marriage of assessee. respondent assessee being aggrieved by assessment order dt. 29/3/2014 preferred appeal before Commissioner of Income Tax Appeal-1, Indore and learned Commissioner by order dt. 29/9/2014 partly allowed appeal of assessee and deleted addition of Rs,1,02,50,000.00. appellate Authority on basis of number of invitation cards printed, estimated number of guests attending function, approximately 20000 persons, estimated catering expenses of Rs.40 lacs and after reducing expenses already disclosed by assessee maintained addition to extent of Rs.28,66,983.00 against Rs.1,31,16,983.00 made by Assessing Officer, meaning thereby, relief of Rs.1,02,50,000/- was granted to assessee respondent. Income Tax Department filed --- 3 --- appeal against order of Commissioner of Income Tax (Appeal) before Income Tax Appellate Tribunal and cross objection was filed by assessee. Income Tax Appellate Tribunal, has dismissed appeal of Department and has allowed cross-objection of assessee. Income Tax Appellate Tribunal has affirmed findings of Commissioner of Income Tax (Appeal) about estimate of number of persons attending function which was based upon invitation cards printed and distributed. While considering expenses on catering Income Tax Appellate Tribunal has considered and accepted assessee's contention that assessee's (respondent) family members are in same line of business and they are running restaurant in name of 'Vrindavan' and, therefore, there was no such expenditure as estimated by CIT(A). Income Tax Appellate Tribunal in paragraph 6 of judgment has held as under: 6. We have heard both sides. Looking to facts and circumstances of case, we find that learned CIT(A) has estimated number of guests at 57,000 on estimate basis but assessee has submitted that 9500 visiting cards were distributed and as such at least 19000 --- 4 --- persons must have attended. Therefore, he has calculated and relief was granted but we are of view that assessee has given calculation that assessee has provided entire material for preparation of food and assessee is having experience of preparation of food. family members of assessee are running restaurant in name of 'Vrandavan', hence, there may not be much expenditure involved in catering guests. In our opinion, expenditure depends upon items being served to guests which may be of very high quality or very low quality. Since assessee himself runs restaurant 'Vrindavan' there is always possibility of incurring less expenditure on food items. We, therefore, confirm findings of learned CIT(A) on issue and dismiss this ground of appeal of revenue. This Court has carefully gone through order passed by Assessing Officer, Commissioner of Income Tax (Appeals) as well as order of Income Tax Appellate Tribunal. Revenue has filed present appeal u/S. 260 of the Income Tax Act, 1961 on following substantial questions of law : (1) Whether on facts and in circumstances of case and in law ITAT, was justified in upholding decision of CIT(A) while decision of CIT(A) as regards acceptance of affidavit without giving reasonable opportunity to counter AO is contravention of provision of Rule 46A of Income Tax Rule, 1962 ? (2) Whether on facts and in circumstances of case and in law, ITAT, was justified in allowing relief on cross objection filed by assessee and restricting addition to Rs.1,00,000/- as against Rs.28,66,983/- confirmed by learned CIT(A) u/S. 69C of Act which is contrary to facts on record ? --- 5 --- It is pertinent to note that so far as first question regarding contravention of provisions of Rule 46A of IT Rules, 1962 on account of failure of CIT(A) to grant opportunity to AO before accepting affidavit is concerned, since no such issue was raised by Department before ITAT, said question cannot be raised first time in present appeal u/s 260A of IT Act . In this respect learned counsel for assessee has drawn attention of this Court towards Para 5 of ITAT s order where ITAT has noted arguments of departmental representatives, who has in fact, admitted that AO had made addition in question on basis of estimate about number of persons attending function . Thus, question regarding admissibility of affidavit u/R. 46A has neither been raised nor argued by Department before ITAT and said question is being raised for first time in present appeal. It has been contended by learned counsel for respondent - assessee that legal position on this aspect as to whether question can be raised for first time in appeal to High --- 6 --- Court is well settled by judgment delivered by Hon'ble Supreme Court in case of Santosh Hajari Vs. Purshottam Tiwari reported in (2001) 251 ITR 84. To be question of law involved in case there must be first foundation for it laid in pleading and question should emerge from sustainable findings of fact arrived at by court of facts and it must be necessary to decide that question of law for just and proper decision of case. Any entirely new point raised for first time before High Court is not question involved in case unless it goes to root of matter . Reliance has also been placed upon judgment delivered in case of Sista's (P) Ltd., Vs. CIT-2 reported in (2012) 211 Taxmann 244 (Bom) and in case of CIT Vs. Tata Chemicals Ltd., reported in (2002) 256 ITR 395 and in case of Alok Todi & another Vs. CIT reported in (2011) 339 ITR 102 (Cal). As regards other question raised by appellant Department, same relates to ITAT s decision of allowing assesee s cross objections filed against decision of CIT(A) maintaining addition of Rs 28,66,983/- u/s --- 7 --- 69C of Act . In this regard contention of respondent / assessee is that decision of ITAT in this respect about estimation of food and catering expenses is based entirely upon findings recorded by it in Para 6 of its order, wherein after affirming CIT(A) s estimation about number of guests attending function, ITAT has taken into consideration family background of appellant regarding running of restaurant and on that basis ITAT has restricted addition to Rs 1,00,000/-. findings of ITAT regarding family background of appellant are findings of fact and appreciation of attending circumstances regarding possibility of lower expenses on catering. ITAT s decision affirming decision of CIT(A) cannot therefore be said to be erroneous or perverse. Moreover, question about number of guests attending ceremony and quantum of expenditure incurred on ceremony are both questions of facts requiring evidence and / or material to support any addition made on that account. In present case, sequence of events narrated above shows that AO made addition purely on basis of his wild guess work about number of persons attending functions without bringing on record any material to support same. In appeal before CIT(A) ,the CIT(A) disapproved estimate of AO about number of persons attending functions as without any basis and thereafter considering number of invitation cards printed and --- 8 --- distributed made estimate about number of guests attending function and further estimated expenses on catering and food. Thus, neither AO nor CIT(A) had gathered any material about actual number of guests attending functions or about actual expenditure incurred on food and catering and both orders were based purely on estimate basis . Under these circumstances in absence of any evidence / material to support addition in question, ITAT is fully justified in deleting addition by maintaining nominal addition of Rs 1,00,000/- . Since finding of ITAT in this respect are not under challenge, ITAT s decision based on such finding being proper and correct does not warrant any interference and no substantial question of law arises in case. Learned counsel for respondent submits that appeal u/s 260A is maintainable only if case involves substantial question of law and in instant case since no substantial question of law is involved, appeal itself is not maintainable because decision of ITAT is based purely upon findings of fact regarding absence of any evidence with regard to number of persons attending functions. CIT(A) has recorded specific finding that AO s estimate about number of persons attending functions was without any basis. Such finding which is finding of fact has been affirmed by ITAT. Needless to say --- 9 --- that question as to how many persons attended function is purely matter of fact requiring evidence / material about same. Similarly issue about expenditure incurred on marriage is also question of fact to be decided on basis of material / evidence about actual expenses incurred as such question whether Respondent has actually incurred expenses or not is also question of fact . decision of ITAT is thus based on findings on these issues which are not under challenge in this appeal at instance of revenue. legal position in this respect is well settled by decisions of Apex Court that in appeal u/s 260A findings of ITAT cannot be disturbed and there is no scope for interference by this Court with finding recorded, when such can be treated as finding of fact as held by Hon'ble apex Court in case of M. Janardan Rao Vs. Joint CIT reported in (2005) 273 ITR 50 and same reads as under : finding of fact can give rise to question of law only in event finding is based on no evidence and/or while arriving at said findings, relevant, admissible evidence has not been taken into consideration or inadmissible evidence has been taken into consideration or legal principles have not been applied in appreciating evidence, or when evidence has been misread. similar view has been taken by Hon'ble Supreme Court in case of Chandna Impex Pvt Ltd Vs Commissioner of Customs, New Delhi reported in (2011) 269 ELT 433. --- 10 --- In present case, position is just reverse that appellate authorities have set aside order of AO for want of evidence for estimation of number of persons attending functions. estimation was entirely based on his guess work without any material to support same. Finding regarding absence of evidence / material to support estimation is undoubtedly finding of fact arrived by CIT(A) and affirmed by ITAT which is not even under challenge. above principle has been followed and applied by this Court in case of Kantilal Prabhudas Patel Vs DCIT reported in (2005) 277 ITR 504, wherein it is held as under : Any factual finding once recorded and consistently upheld by Tribunal is binding on high Court while hearing appeal u/s 260A of IT Act, 1961 . It is only when it is noticed that finding is de-hors evidence or against any provision of law or perverse to its extreme , that no judicial man can ever reach such conclusion , that case for interference in appeal u/s 260A will be made out. Learned counsel for respondent submits that legal position about estimation is thus well settled by above decision by Apex Court as such concurrent decisions and findings of both appellate authorities ie., CIT(A) and ITAT are therefore in conformity with law laid down by Apex Court and ITAT is,therefore, correct in law in coming to conclusion that addition is unsustainable in law. Such decision of Appellate Tribunal therefore, does not involve any question --- 11 --- of law / substantial question of law. Apex Court in case of J.J. Enterprises v/s CIT reported in (2002) 254 ITR 216, wherein case before ITAT had set aside addition as unsustainable because it was made on basis of pure guess work . Apex Court held that finding of Tribunal is one of fact in respect of which Tribunal s conclusion was final and no question of law arose out of said decision. Reliance has also been placed upon decision of Delhi High Court in case of Vinay Kumar Modi V/s CIT reported in (2005) 272 ITR 91 where arbitrary estimate of guest attending function made by AO and addition made on basis of same without proper material which was affirmed by ITAT was held to be improper by High Court . Delhi High Court in case of CIT v/s Lubetec India Ltd reported in (2009) 311 ITR 175, has held that it is quite clear what is postulated in Section 69C of Act and first of all assessee must have incurred that expenditure and thereafter if explanation offered by assessee about source of such expenditure is not found satisfactory by assessing officer, amount may be added to his income. In present case there was nothing to show that expenditure in fact was incurred by assessee and Tribunal noted that AO had not made --- 12 --- any enquiry to find out whether such expenditure was actually incurred by assessee. In such circumstances High Court came to conclusion that no substantial question of law arose out of order of Tribunal. Similarly Bombay High Court in case of CIT V/s Videocon International Ltd reported in (2015) 229 Taxman 412 dismissed appeal of revenue filed against decision of ITAT deleting addition made by AO u/s 69C on basis of some statement without any further evidence about fact of actual expenditure . Lastly, learned counsel for respondent has placed reliance upon decision of Madras High Court in case of CIT V/s R Ganesh (minor) reported in (2005) 272 ITR 610 on question of scope of appeal u/s 260A of IT Act, 1961. According to their Lordships Section 260A does not enable parties to file appeal, if they are aggrieved, as against factual finding rendered by Appellate authority. It has been further held that when appellate authority have rendered factual finding that order of AO was not correct, finding that addition was unwarranted being based upon no evidence, no substantial question of law is involved in such case . Keeping in view aforesaid, this Court is of considered opinion that orders passed by CIT(A) and ITAT in light of above settled legal position, does --- 13 --- not warrant any interference, question as to how many persons attended marriage function and question about determination of such number of persons is undoubtedly question of fact and decisions of Appellate authority deciding such questions clearly involves factual issues and does not involve any substantial question of law. Again question whether any addition u/s 69C is warranted in facts and circumstances of case also revolves around factual findings and decision of ITAT that no addition is warranted in facts and circumstances of case does not involve any substantial question of law. Accordingly, present appeal filed by Department / Revenue is dismissed in limine. (S. C. SHARMA) (ALOK VERMA) JUDGE JUDGE KR Principal Commissioner of Income-tax-I, Indore v. Akash Vijayvargiya
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