2011-VIL-922-RAJ-DT

RAJASTHAN HIGH COURT

D.B. IT Appeal No. R560 of 2011

Date: 10.10.2011

COMMISSIONER OF INCOME-TAX, JAIPUR-II, JAIPUR

Vs

PRECIOUS JEWELS CORPORATION

R.B. Mathur for the Appellant.

BENCH

A.M. Sapre and Miss. Bela M. Trivedi, JJ.

JUDGMENT

1. This is an appeal filed by the Commissioner of Income-tax under section 260A of the Income-tax Act against an order dated 30.6.2008 passed by I.T.A.T., Jaipur Bench, Jaipur (for short called Tribunal) in I.T.A. No. 151/JP/2008 for the period AY 2004-2005.

2. By impugned order, the Tribunal dismissed the Revenue's appeal and in consequence upheld the order of Commissioner of Appeals on the issue raised in this appeal.

3. So the question that arises for consideration in this intra court appeal is whether appeal involves any substantial question of law within the meaning of section 260A ibid?

4. Having heard the learned counsel for the appellant and on perusal of record of the case, we are inclined to dismiss the appeal in limine as in our opinion the appeal does not involve any substantial question of law as is required to be made out within the meaning of section 260A ibid.

5. The issue relates to certain additions amounting to Rs. 89,49,075/- made by the A.O. in the course of assessment proceedings in the A.Y. 2005-06 on account of alleged bogus purchases made by assessee with certain persons. The CIT(A) as also Tribunal deleted the additions made by AO and held that transactions in question are genuine. In other words, the CIT(A) and Tribunal accepted the factual explanation coupled with the evidence tendered by assessee in relation to the impugned additions made by A.O. and held that since the same have been properly explained by assessee by submitting adequate evidence and hence, they cannot be included while computing the total income of the assessee and have to be held as genuine one.

6. This is how the Tribunal dealt with this issue relating to impugned addition in para 5 of impugned order:

"5. Considering the above submissions, we find substance in the argument of the ld. A/R that after completion of the transaction assessee was having no control over the suppliers from whom claimed purchases were made nor it was justified to expect control of the assessee over the suppliers to utilize the money paid in consideration against the purchases of goods differently. The assessee had furnished all the necessary information supported with documents which could have been expected from a prudent purchaser to establish the genuineness of the claimed purchases. These documents were copies of vouchers of purchases containing all the necessary details including Sales-tax Registration Number, Bank account of the assessee showing the payment made to the parties against purchases, export invoices reflecting the export of the goods purchased from the claimed parties and copy of bank account showing the receipt of remittances of export sales. These documents have been placed at pages 1 to 77 and 83 to 115 of the paper book. Payments have been made by account payee cheques. Their confirmations were also filed. In the cases of M/s. Kartika Exports, M/s. Gems Hi Gems, M/s. RAS Gems Exports, M/s. Gaurave Exports, M/s. Shilp Exports, M/s. S.Gulab Chand & Co., M/s. Girish Diam, M/s. Veni Gems and M/s. Arun Jewellers, the assessee had also filed copies of their Income-tax return, computation, ledger account. In the case of Fine Jewellery Co., the assessee had filed their confirmations, and copies of ledger account besides purchase bills. Thus we find in one hand the assessee had furnished all the necessary information supported with documents to establish the genuineness of the claimed purchases made from the said parties whereas in other hand there was no any positive evidence on record to support the allegation of the AO that the above stated parties were not genuine. The AO has not come with any positive evidence to establish that the goods were not purchased from those parties but from someone else and that the amount paid by the assessee in consideration against the supply of goods to them were ultimately returned by them to the assessee. Merely because assessee could not produce the suppliers, on the later occasion during the course of assessment proceedings or in some cases the parties did not respond summons served upon them does not lead to the conclusion beyond doubt that the purchases claimed and the suppliers were not genuine, especially when the export of goods has not been denied by the AO. Under these circumstances we are of the view that the ld. AO having distinguishable facts and circumstances are not of any assistance to the revenue. The decisions in the case of DCIT v. Adinath Industries, (supra), DCIT v. Brahmaputra Steels Pvt. Ltd. (supra), Raunaq Finance Co. v. JCIT (supra), Shiv Trading co. v. ITO (supra), Om Metals & Minerals Ltd. v. JCIT (supra), Sagar Mal Daa & Co. v. ITO (supra), Sambhav Gems Ltd. v. ACIT (supra), Parasmal Jain v. DCIT (supra) and Praksh Chand Vijay (supra) relied upon by the ld. A/R also support the decision of first appellate authority. We thus do not find reason to interfere with the first appellate order on the issue. The same is upheld. The ground is thus rejected."

7. Learned counsel for the appellant (Revenue) contended that firstly AO was right in adding Rs. 89,49,075/-. His second submission was that there was no factual basis for deletion of Rs. 89,49,075/- and in last, he contended that finding recorded by Tribunal on impugned deletion is perverse and hence finding of AO be restored, We do not agree to any of these submissions for more than one reason.

8. In the first place, what is involved in the case is a pure question of fact and not any question of law much less substantial question of law. Secondly, this Court cannot again in this appeal undertake the examination of factual issues nor can draw any factual inferences on the basis of explanation offered by assessee. Thirdly, once the explanation is accepted by an appellate court, then in such event, a finding recorded on such explanation would be binding on the High Court.

9. Perusal of the impugned finding would go to show that CIT (Appeals) and Tribunal did examine the issue in detail and then recorded a finding of fact. Such finding being concurrent in nature does not constitute any substantial question of law within the meaning of section 260A ibid in an appeal arising out of such order.

10. Even otherwise, in order to examine as to whether any particular transaction is genuine or bogus, one is required to see the manner in which it was entered into between the assessee and its buyer. In this case, we notice that assessee filed copies of vouchers of purchases made by them, which contained sales tax registration number, Bank Account showing payment made to parties, export invoices and bank correspondence. Not only that payments were made by A/C cheques. Even confirmatory letters were filed by the purchasers. All these documents were examined by CIT (Appeals) and Tribunal in their appellate jurisdiction and then finding of fact was recorded that transactions in question entered into by the assessee are genuine and hence they must get its benefit while computing their yearly turnover for determination of their income. Such concurrent finding of fact is binding on this Court.

11. In our opinion, therefore, once the CIT(A) and Tribunal accepted the factual explanation offered by the assessee and on that basis deleted the additions made by A.O. then it would not involve any substantial question of law for its examination. In other words, this Court in its appellate jurisdiction under section 260A ibid, would not denovo hold another factual inquiry with a view to find out as to whether explanation offered by the assessee and which found acceptance to the two appellate authority i.e. CIT (Appeals) and Tribunal is good or bad. It is only when the factual finding recorded by two appellate authorities is found to be entirely dehors the subject, or if it is found to be based on no reasoning, or absurd reasoning to the extent that no prudent man of average judicial capacity could ever record, or when it is found to be against any provision of law, then a case for formulation of any substantial question of law on such finding arises. Such is not the case here.

12. We thus, do not find any merit in the appeal.

It fails and is accordingly dismissed in limine by holding that it does not involve any substantial question of law within the meaning of section 260A of the Act.

 

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