Commissioner of Income Tax vs Parkash Industries Ltd.

Adarsh Kumar Goel, J.—This appeal has been preferred by the Revenue u/s 260A of the income tax Act 1961 (in short, ""the Act"") against

the order dated February 4, 2009, passed by the income tax Appellate Tribunal, Delhi Bench ""F"", New Delhi, in I. T. A. No. 2993/Del/ 2008, for

the assessment year 1993-94, proposing to raise the following substantial question of law:

Whether on the facts and in the circumstances of the case, the learned income tax Appellate Tribunal was right in law in cancelling the penalty of

Rs. 76,97,423 levied u/s 271(1)(c) of the income tax Act, 1961 in respect of addition of Rs. 1,48,74,249 representing peak amount of credit

shown as receipts from one M/s. Sahib Engineering Works which is a non-existent entity particularly when the Revenue is in appeal to the Hon''ble

High Court against the deletion of addition of Rs. 1,48,74,249 on quantum?

During the assessment, the Assessing Officer referred to the material found during search that the assessee received amount of Rs. 3.5 crores from

the bank account of M/s. Sahib Engineering Works, Faridabad. It was observed that the said firm was a bogus firm and the claim of the assessee

that the amount was received towards consideration for sale of material, was not accepted. Inference was drawn that the assessee siphoned off its

unaccounted money by making M/s. Sahib Engineering Works a conduit pipe through which unaccounted money travelled and reached back to

the assessee. Thus, addition was made to the declared income. Further additions were made by holding that lease rent shown to have been paid by

the assessee had not been in fact paid and the claim for depreciation could not be allowed as machinery was not in possession of the assessee

during physical verification. The Commissioner of income tax (Appeals) upheld the addition in respect of receipts shown to have been made from

M/s. Sahib Engineering Works but deleted the addition towards lease rent and depreciation allowance, taking into account additional evidence led

by the assessee.

On further appeal, the Tribunal upheld the plea of the assessee in respect of amount received from M/s. Sahib Engineering Works but dismissed

the appeal of the Revenue in respect of deletions in respect of lease, rent and depreciation allowance.

We have heard learned counsel for the appellant.

Learned counsel for the Revenue submits that the finding of the Tribunal that transaction for sale, for which amount is alleged to have been

received from M/s Sahib Engineering Works, was genuine, is perverse.

This contention cannot be accepted. The Tribunal has recorded reasons taking into account, inter alia, the following circumstances:

A. The assessee sold steel to M/s Sahib Engineering Works.

B. M/s. Sahib Engineering Works have sold the Steel rolling mills rolls to M/s Kotak, SRF and Times.

C. M/s. Kotak, SRF and Times, leased these rolls to the assessee.

D. Neither the transaction of sale of rolls by M/s. Sahib Engineering Works to M/s. Kotak, SRF and Times is in dispute nor lease by M/s. Kotak,

SRF and Times to the assessee is in dispute or doubt. On the contrary, the lease rent payments by the assessee is held allowable.

E. Later on Kotak, SRF and Times took legal steps for recovery of lease rentals, which were settled. This also proves the genuineness of the

transaction of lease of rolls by Kotak, SRF and Times to the assessee which as per the lease deed were bought by lessors from M/s. Sahib

Engineering Works.

F. Money which came to the account of the assessee is from account of M/s. Sahib Engineering Works and money which came into the account of

M/s Sahib Engineering Works came from accounts of M/s. Kotak, SRF and Times. Thus, the assessee has not only proved source of its credit but

also proved source of source with corroborating overwhelming evidence.

The above reasons cannot be held to be non-existent. The matter is in the realm of appreciation of evidence. Even if it is held that two views are

possible, inference drawn by the Tribunal, being final fact finding authority, cannot be held to be perverse. As regards deletion by the

Commissioner of income tax (Appeals) after referring to additional evidence led before him, the Tribunal has examined the matter and recorded

that a remand report was duly sought and thus no prejudice was caused by considering the additional evidence. There is no doubt that additional

evidence has to be allowed only for the specific reason, there cannot be rigid yardstick for sufficiency or otherwise of the reason in a given case.

Admittedly, the Revenue did not raise this objection before the Tribunal. Explanation given is that the fact that reasons had not been recorded

came to the light only on inspection of record. This cannot be held to be a handicap with the Revenue as the record could have been inspected

even earlier when the appeal was filed before the Tribunal.

No substantial question of law arises.

The appeal is dismissed.