IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA.No.844 of 2008 (O&M) Date of decision: 2.7.2009 Commissioner of Income-tax-II, Chandigarh. ......Appellant Vs. Dhani Ram Porp M/s Chauhan Brothered, SCF 20, Sabzi Mandi, Sector 26, Chandigarh. ...Respondent CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT: Ms. Urvashi Dhugga, Advocate, Standing Counsel for the Revenue. **** ADARSH KUMAR GOEL, J. (Oral) 1. This appeal has been preferred by the Revenue under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh, Bench-B in ITA No. 1232/ Chandi/2004 dated 23.12.2005 for Assessment Year 1999-2000, proposing to raise following substantial questions of law: 1.” Whether in this case the Hon'ble lTAT was legally right in upholding the decision of the learned CIT (Appeals) based on the Hon'ble Gujrat High Court judgment in the case of CIT vs. President Industries (2002) 258 ITR 654, when the facts of the present case ITA NO. 844 OF 2008 -2- and case relied upon were altogether different?” 2. “Whether the Hon'ble ITAT was right in ignoring the fact that sales of apples made by the assessee (though on commission basis) were out of stock lying with him and the fact that assessee had made investment in purchase of that stock?” 2. The Assessing Officer asked the assessee to explain why addition be not made, on account of unaccounted sales to Shri Jagdish Chawla Prop. M/s Sai Baba Fruit Co., to the returned income revealed from the documents seized during the survey conducted on 6.11.1998 for the assessment year 1999-2000. The explanation furnished by the assessee was not accepted by the Assisting Officer and addition of Rs.1,22,604/-. It was observed that the assessee had made investment but the same has not been explained and accounts were not produced. 60% of the peak investment was treated as income. 3 On appeal, the Commissioner of Income-tax partly set aside the addition. It was also held that instead of taking 60 peak investment as income, the amount of the profits assessed on the basis of commission at the rate of 5% of the total sale should be added. The Tribunal upheld the said view. The conclusion of the Tribunal is as under: “ Thus, it is evident from the claim of the AO himself that the documents seized in the course of survey reveled that assessee had sold apples on commission basis to M/s Sai Baba Fruit Co. It is, ITA NO. 844 OF 2008 -3- therefore, not reasonable for the revenue to treat the supply of apples on outright sale against the evidence found in the course of survey. Since the documents seized in the course of survey revealed that assessee had supplied apples to M/s Sai Baba Fruit Co. on commission basis, it is reasonable to assess the commission income in respect of the undisclosed turnover of Rs.6,23,550/-. This is in addition to the income disclosed by the assessee of Rs.64,200/-. The only issue that survives for our consideration is whether the CIT (A) was justified to assess the commission @ 5% only. In the case of Shri Sanjay Chhabra, Prop.M/s Sanjay Chhabra Traders (Supra), the ITAT, Chandigarh Bench has accepted the commission of 5% on fruit supply as reasonable.” 4. We have heard learned counsel for the revenue. 5. It is submitted that investment itself should have been treated as income and not the commission. The judgment of Gujrat High Court in CIT vs. President Industries (2002) 258 ITR 654 relied upon by the Tribunal was distinguishable. The fact remains that CIT (A) on facts has held that investment could not be treated as income and income will only be the commission earned from sale. 6. In our view, the finding of the CIT (A) is finding on fact. ITA NO. 844 OF 2008 -4- Assessment the income from the documents which were found during survey cannot be subject matter of any rigid principle. Assessment has to be made on facts of each case. The findings of the CIT (A) and the Tribunal are, thus, findings on fact. 7. No substantial question of law arises. 8. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE (DAYA CHAUDHARY) July 02, 2009 JUDGE raghav Note: Whether this case is to be referred to the Reporter ........Yes/No ITA NO. 844 OF 2008 -5- ITA NO. 844 OF 2008 -6-