Income Tax Appeal No. 475 of 2005 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 475 of 2005 Date of decision: 11.3.2011 M/s. Vimal Alloys Ltd. --- Appellant Versus Commissioner of Income Tax, Patiala --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. D.K. Goyal, Advocate for the appellant-assessee. Mr. Tejinder K. Joshi, Standing Counsel for the respondent-Revenue. --- AJAY KUMAR MITTAL, J. This order will dispose of two appeals, i.e. Income Tax Appeal Nos. 475 and 476 of 2005 as counsel for the parties submit that identical questions are involved therein. The facts are taken from Income Tax Appeal No. 475 of 2005. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the assessee against the order dated 6.4.2005, passed by the Income Tax Appellate Tribunal, Chandigarh Income Tax Appeal No. 475 of 2005 2 Bench ‘A’ Chandigarh (in short “the Tribunal”) in ITA No. 77/CHANDI/2002, relating to the assessment year 1998-1999. The following substantial questions of law have been claimed for determination of this Court: i) Whether under the facts and circumstances of the case can there be any enhancement of income by disallowance of loss on account of the regular accepted trade practice, norms and on account of the handling of the material? ii) Whether under the facts and circumstances of the case the burden of proof as laid on the assessee having been discharged on the basis of the documents produced before the Assessing Authority for the claim of the loss the onus stood discharged? iii) Whether the Tribunal is justified in arriving at a conclusion which is not in consonance with the facts, evidence and the arguments raised thus, is contrary to the same leading to a perversity? The facts, in brief, necessary for adjudication as narrated in the appeal, are that return of income for the assessment year 1998-99 was filed by the assessee on 17.11.1998 showing income of Rs. 12,08,140/-. The return was processed under Section 143(1)(a) of the Act and consequently, the assessing officer vide order dated 30.11.2000 made an addition of Rs.1,49,800/- on account of non-establishment of shortage, being 1% of the scrap imported by the assessee weighing 1511.520 metric tonnes and, thus, disallowed the claim of the assessee for shortage. Feeling aggrieved by the order of the assessing officer, the assessee filed appeal before the Commissioner of Income-tax (Appeals) Income Tax Appeal No. 475 of 2005 3 {in short “the CIT(A)”}, raising various grounds. The CIT(A) allowed the appeal vide order dated 21.11.2001. This led to filing of appeal before the Tribunal by the Revenue. The Tribunal, vide order appealed against here reversed the order of the CIT(A). It is how the assessee is once again in appeal now before this Court. We have heard learned counsel for the parties and have perused the record. The issue that arises for consideration in this appeal is, whether the Tribunal was justified in disallowing the claim of the assessee on account of shortage of imported scrap amounting to Rs. 1,49,800/-. The Tribunal in para 2.2 of its order had noticed that the goods of the assessee were insured but in spite of the same the assessee did make any claim in respect of goods imported which were found to be short at the time of delivery. It was further recorded that the claim of the assessee relating to shortage of scrap was not substantiated. The observations of the Tribunal relevant to the issue under consideration are as under: “2.2. We have heard the rival submissions, perused the order of tax authorities and gone through the material available on record. We find that the assessee though has insured the goods has not claimed the same while taking delivery of the goods imported by it only on the ground that it wanted to avoid litigation and time to claim such insurance, whereas the documents furnished in respect of the assessee’s claim to have received shortage of imported goods have been issued by the agents appointed by the assessee only. Since the Income Tax Appeal No. 475 of 2005 4 assessee itself has chosen not to claim insurance, though the same was made by the assessee for prospective loss, in our considered opinion, the claim of the assessee on account of shortage of scrap was not established. We, therefore, in view of facts of the case, hold that the CIT(A) was not justified in deleting addition made by the AO. We, therefore, set aside the orders of the CIT(A), restore that of the AO and accept the ground raised by the revenue for both the years.” Learned counsel for the assessee was unable to furnish any explanation, much less a satisfactory explanation for not filing the claim for insurance on account of shortage of scrap in spite of the fact that the goods were insured. The finding recorded by the Tribunal is a finding of fact based on appraisal of material available on record. No error of law or perversity could be pointed out by the learned counsel for the assessee that may warrant interference by this Court. Finding no merit in the appeals the same are dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) March 11, 2011 JUDGE *rkmalik*