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M/S
Anis Ahmad and Sons Vs. Commissioner of Income Tax (Appeals), Kanpur & Anr. [2008] Insc 68 (22 January 2008)
P.
P. Naolekar & Lokeshwar Singh Panta
[Arising
out of S. L. P. (C) No.3135 of 2005] Lokeshwar Singh Panta, J.
1.
Leave granted.
2.
This appeal has been filed by the appellant-firm against the judgment and order
dated 01.11.2004 passed by the High Court of Judicature at Allahabad in Income Tax Appeal No. 94/2004.
By the impugned judgment, the High Court dismissed the appeal of the appellant
in limine and affirmed the order dated 15.01.2004 of the Income Tax Appellate
Tribunal, Lucknow Bench.
3. The
facts in short are as under:- The appellant-firm (hereinafter referred to as
the appellant-assessee) is carrying on business as Commission Agent
in raw hides and skins. The raw hides and skins comprises of buffalo hides, cow
hides, katta and katai or goat and sheep skins. The goods are brought in the Mandi
(market) by Vyaparis (traders) through trucks. These Vyaparis go to different Arhatdaars
(Commission Agents) of their choice where they get the goods counted. The
amount is first entered in the Bilti Register, after that bundles are prepared
and each Vyapari is given his Lot Number. Sometimes, the Vyaparis requested the
Arhatdaars (Commission Agents) to pay the freight charges of the trucks. The Arhatdaar
opens account of each Vyapari in his Ledger Book where numbers of different
types of pieces of raw hides are entered without entering the money value
thereof. The Vyaparis sometimes stayed in the Mandi for 4 or 5 days to study
the market themselves and then they would give instructions to Arhatdaars for
selling their goods.
4.
When goods are sold, the sale price minus commission and other charges are
credited in the account of the Vyaparis and commission charges or other charges
receivable are credited in the relevant accounts and full sale price of the
goods is debited to the account of the purchaser. The Arhatdaars shall maintain
full details such as weight rate, the name of Vyaparis whose goods are sold and
name of the purchasers in Taul/Shumar Bahi. This book contains original entry.
Thereafter, entries are passed through jakar and posted in relevant accounts of
ledger. This practice is being followed by each and every Arhatdaar. The Vyaparis
paid the balance amount generally in cash, in installments or full after
receipt of the amount from the customers. The rate of commission on different
type of hides and skins is settled by the Association and no Arhatdaars can
charge anything more on that account.
5. The
appellant-assessee filed income tax return for the assessment year 1984-85
declaring Rs. 1,32,830/- as its total income as Commission Agent. The Income
Tax Officer, Circle II, Kanpur, vide assessment order dated 13.03.1987 framed
under Section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as
the Act) has treated the appellant-assessee as a Trader and
not as a Commission Agent and assessed its total income Rs.4,06,810/-
for payment of income tax. He issued penalty notice under Section 271(1)(a) and
271(1)(c) and 273(2)(a) of the Act, separately.
6.
Being aggrieved, the appellantassessee preferred an appeal before the
Commissioner of Income Tax (Appeals). The Commissioner of Income Tax vide order
dated 04.04.1988 partly allowed the appeal. The appellantassessee and the
respondentIncome Tax Department feeling aggrieved against the order of the
Commissioner of Income Tax filed two separate appeals before the Income Tax
Appellate Tribunal.
The
Tribunal by order dated 19.08.1993, without going into the merits of the case,
set aside the assessment order and remanded the file back to the Assessing
Officer to re-scrutinise the entire accounts after giving the appellant-assessee
an opportunity of being heard and also giving the appellant- assessee an
opportunity of filing any evidence in support of its claim that there was no
discrepancy in its accounts as pointed out by the Assessing Officer or as found
out by Commissioner of Income Tax (Appeals) in his order dated 04.04.1988.
7. On
remand, the Assessing Officer issued summons to ten traders under Section
131(1) of the Act. In response to the summons, five traders appeared and gave
evidence in favour of the appellantassessee. The remaining five traders did not
appear because they could not be served with the summons as they were residing
outside the State of U.P. The Assessing Authority has drawn
adverse inference against the claim of the appellantassessee and assessed
Rs.2,30,704/- as total income for the assessment year 1984-85 treating the
transaction with the absentee traders as having been done by the appellantassessee
in the capacity of Trader and not as Commission Agent.
8. The
appellantassessee has assailed the impugned order dated 29.03.1996 of the
Assessing Authority before the Commissioner of Income Tax (Appeals), who vide
his order dated 09.06.1997 set aside the said order by holding as follows:-
The appeal relates to a fairly old year, for which reason the scope for
enquiry has been reduced, now. In my opinion, it was rather arbitrary to treat
the appellant as dealer in respect of outside U.P. parties who did not appear
before the A.O. while accepting him as an Arhatiya in respect of
those who appeared before the A.O.
The
A.O. did not get any enquiry done from the said Arhat Market.
Therefore, in my opinion, it is no longer desirable to stretch this dispute.
Accordingly,
the A.O. is directed to accept the appellant as an Arhatiya for this
year and also to accept the profit from commission shown by him
9. The
Revenue, feeling aggrieved, preferred an appeal before the Income Tax Appellate
Tribunal. The Tribunal by its order dated 15.01.2004 allowed the appeal and
held that the appellantassessee has failed to produce any evidence that the
transactions, in question, were not conducted by the appellantassessee as Vyapari
but the transactions were conducted on commission basis. Being aggrieved
against the said order, the appellantassessee filed Income Tax Appeal before
the High Court. The High Court, as noticed above, has concurred with the
findings recorded by the Assessing Authority as confirmed by the Appellate
Tribunal and dismissed the appeal in limine. Now, the appellantassessee is
before this Court.
10. We
have heard Mr. Subramanium Prasad, the learned counsel for the appellantassessee
and Shri T.S. Doabia, learned Senior Advocate for the respondents, and with
their assistance examined the material on record. The learned counsel for the
appellantassessee submitted that the High Court has committed grave error of
fact and law in dismissing the appeal in limine without proper appreciation of
the facts and legal proposition of law. According to him, for non- appearance
of the traders summoned by the Assessing Authority, no fault could have been
laid upon the appellant assessee and the Assessing Authority, the Appellate
Tribunal as well as the High Court are not justified in drawing adverse
inference against the appellantassessee holding it to be Trader in
relation to the transactions conducted by the appellant-assessee of the same
goods in the same manner as was conducted with the traders whose evidence was
accepted by the Assessing Authority.
11.
Per contra, the learned senior counsel appearing on behalf of the respondents
has sought to support the order of the Assessing Authority which has been
confirmed by the Appellate Tribunal as well as by the High Court, contending
that this Court in exercise of its discretionary jurisdiction under Article 136
of the Constitution of India shall be slow in interfering the well-reasoned
orders of the authorities and the High Court based upon the proper appreciation
of the facts in issue and the law.
12.
Having considered the respective contentions of the learned counsel for the
parties and having gone through the entire material on record, we are of the
view that the impugned judgment and order of the High Court cannot be
sustained. The record reveals that for the year 1983-84, the Assessing
Authority had accepted the claim of the appellant- assessee dealing in the
business of hides and skins as a Commission Agent. The appellantassessee
filed a chart of payments made to the purchasers by the traders through the
appellantassessee acting as a Commission Agent. The five traders, who appeared
before the Assessing Authority, have supported the claim of the appellant-assessee
to be a Commission Agent and not a Trader and the Assessing
Authority has accepted their evidence holding the appellant- assessee as a
Commission Agent in respect of the transactions conducted with them by the
traders. The appellant-assessee could not be held responsible for
non-appearance of those five traders to whom the summons were issued by the
Assessing Authority, as they are residing outside the State of U.P. For non-appearance of those traders, no adverse
inference ought to have been drawn by the authorities below and the appellant-assessee
has led satisfactory evidence that its business is only that of the Commission
Agent and not a Trader dealing in the goods. Now, the subject-matter
of assessment for the year 1984-85 has been opened by the Revenue after a lapse
of about 10-11 years holding the appellant-asseessee as Trader in
respect of dealers who are now living outside the State of U.P. The appellant-assessee could not be treated
unequally between those traders who had appeared before the Assessing Authority
and supported the claim of the appellant-assessee and on the contrary drawing
adverse inference against the appellant-assessee for non- appearance of other
five traders to whom summons of the Assessing Authority could not be served. On
this ground itself, the order of the Assessing Authority cannot be found
reasonable, tenable and justified. As noticed above, the Assessing Authority
for the assessment year 1983-84 had accepted the claim of the appellantassessee
having acted as Commission Agent in respect of the same articles which were
brought by the sellers to the Arhatdaars in the Mandi for sale.
13. In
this view of the matter, the Commissioner of Income Tax is right in holding the
appellantassessee as an Arhatiya (Commission Agent) for the year
1984-85 and not as trader as held by the Assessing Authority and
accepted by the Income Tax Appellate Tribunal as well as by the High Court.
14. In
the result, for the foregoing reasons, this appeal is allowed and the order of
the High Court dated 01.11.2004 passed in I.T.A. No. 94/2004 upholding the
order dated 15.01.2004 of the Income Tax Appellate Tribunal, Lucknow Bench, in
ITA No. 1170/Alld/1997 for the Assessment Year 1984-85 and the original order
of the Income Tax Officer dated 29.03.1996 holding the appellantassessee as
Trader and not Commission Agent are quashed and set aside
and as a result thereof, the order dated 09.06.1997 recorded by the
Commissioner of Income Tax (Appeals) II Kanpur, in Appeal No.CIT(A)II/5/ITO.2(7)/96-97/67
shall stand restored. The parties, however, are left to bear their own costs.
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