IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 08.12.2011 (i) ITA No. 107 of 2005 Commissioner of Income Tax, Rohtak …..Appellant vs. M/s Dabur Bricks Company …..Respondent (ii) ITA No. 113 of 2005 Commissioner of Income Tax, Rohtak …..Appellant vs. M/s Dabur Bricks Company …..Respondent (iii) ITA No. 114 of 2005 Commissioner of Income Tax, Rohtak …..Appellant vs. M/s Dabur Bricks Company …..Respondent CORAM: - HON’BLE MR. JUSTICE HEMANT GUPTA HON’BLE MR. JUSTICE G.S.SANDHAWALIA Present: - Mr. Inderpreet Singh, Advocate for the appellant. Mr. Sandeep Chabra, Advocate for respondent. HEMANT GUPTA, J ITA Nos. 107, 113 and 114 of 2005 This order shall dispose of the above mentioned Income Tax Appeals filed under Section 260-A of the Income Tax Act, 1961 (for short the ‘Act’) arising out the order dated 5.8.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench, Delhi in Income Tax Appeal No. 1570/Del/2004 & Income Tax Appeal No. 1271/DEL/2004 pertaining to assessment year 1995-96 and ITA No. 1571/DEL/2004 pertaining to assessment year 1997-98. The revenue has claimed the following substantial questions of law: - i) On the facts and in the circumstances of the case, the order of the Hon’ble ITAT is perverse as it is based upon incorrect assumption of fact. ii) On the facts and in the circumstances of the case, the Hon’ble ITAT has erred in law in holding that neither the books of accounts were considered by CIT (A) while in fact no such books of accounts/purchase/sales vouchers were produced before the Ld. CIT(A). iii) On the facts and in the circumstances of the case, the Hon’ble ITAT has erred in law in holding that Sh. Jagjit SIngh was not well conversant with the consumption of coal over purchase and sale of bricks as other partners was looking after the manufacturing process of bricks. 2 ITA Nos. 107, 113 and 114 of 2005 iv) On the facts and in the circumstances of the case, the Hon’ble ITAT has erred in law in holding that in view of the facts ad circumstances of the case, the Tribunal was of the view that manufacturing result as well as trading results shown by assessee in its regular books of accounts were not suffering with any infirmity.” A survey under Section 133A of the Act was conducted on the business premises of the assessee on 11.8.1998 when certain loose papers were found. Notice under Section 148 of the Act was issued to the assessee. The assessee filed his return declaring loss of Rs. 1,47,310/- along with trading account, profit and loss account and the balance sheet. When the assessee was called upon to produce the books of accounts during the assessment proceedings, the assessee did not produce the books of account or the vouchers. Consequently the assessment proceedings were completed under Section 144 of the Act. The Assessing Officer found that the assessee has manufactured bricks of the value of Rs 32 lacs. By applying net profit rate of 10%, the profit of Rs. 3,20,000/- was arrived at by the Assessing Officer. The assessee filed an appeal before the Commissioner of Income Tax (Appeals) (for short the ‘CIT(A)’). The learned CIT(A) recorded that before the Assessing Officer, the assessee has not produced any document or books of 3 ITA Nos. 107, 113 and 114 of 2005 accounts nor these were produced during the inquiry under Section 131 directed by him under Section 250(4) of the Act. But the learned CIT(A) reduced the amount of income tax by applying a net profit rate of 6.57%. In further appeal, learned Tribunal returned a finding that infact, the books of accounts were produced before the learned CIT(A) and in view of the said finding, accepted the appeal as the books of accounts were not considered by learned CIT(A) along with the purchase and sale vouchers. The argument of the learned counsel of the assessee before the Tribunal was that complete account books were produced before CIT(A) but could not be produced before the Assessing Officer. Learned counsel for revenue vehemently argued that the finding recorded by the Tribunal that the books of accounts were produced before the learned CIT(A) suffers from perversity and is based upon incorrect facts. In fact, learned CIT(A) has recorded that the books of accounts were not produced before him but applied reduced net profit rate. A perusal of the order passed by learned CIT(A) does not show that such account books were produced before him. Therefore, the Tribunal could not return a finding that books of account were not considered by learned CIT(A) as nothing was produced before him. Such finding recorded by 4 ITA Nos. 107, 113 and 114 of 2005 the Tribunal is nothing but perverse, therefore cannot be sustained. In view of the said fact, the substantial questions of law No. 1 and 2 are answered in favour of the revenue and against the assessee. The other questions of law does not arise for consideration. As a consequence thereof, the matter is remitted back to the Tribunal to decide the appeal afresh on merits according to law. Disposed of. (HEMANT GUPTA) JUDGE (G.S.SANDHAWALIA) JUDGE 8.12.2011 preeti 5