Income Tax Appeal No. 876 of 2008 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 876 of 2008 Date of decision: 30.5.2011 Commissioner of Income Tax Faridabad --- Appellant Versus Smt. Salochana Bhatia, Prop. M/s. Beeru Cable Network, Faridabad --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Ms. Urvashi Dhugga, Senior Standing Counsel for the appellant-Revenue. --- AJAY KUMAR MITTAL, J. The paper-book of this case has not been received from the concerned Branch as the same is said to have been burnt in the fire incident that took place in the premises of this Court on the night of 30th January, 2011. Learned counsel for the appellant has made available two copies of paper-book to the Court for reconstruction of the file. The said copies are taken on record and the file of the appeal is treated as having been reconstructed. 2. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the Revenue against the Income Tax Appeal No. 876 of 2008 2 order dated 25.1.2008, passed by the Income Tax Appellate Tribunal Delhi Bench ‘E’ New Delhi (in short “the Tribunal”) in ITA No. 4054/DEL of 2000, relating to the assessment year 1996-97. 3. The appeal was admitted for determination of the following substantial question of law: “Whether, on the facts and in the circumstances of the case, the Hon’ble ITAT was right in law in confirming the order of the Ld. CIT(A) who deleted the addition of Rs. 17,74,625/- made by the Assessing Officer on account of suppression of receipts even though the assessee did not produce the complete details of actual receipts received from the customers, the books of receipt, cable connection register for verification of cable connections etc. in spite of repeated opportunities given to her and especially when the Assessing Officer had computed the amount of suppressed receipts on the basis of facts stated by the assessee herself in her own statement recorded on 21.3.1997?” 4. The facts, in brief, necessary for adjudication as narrated in the appeal, are that the assessee filed return on 18.10.1996 declaring an income of Rs. 62,120/-. At the time of survey carried out by the ADIT(Investigation), Faridabad, the assessee could not produce complete books of account including cable connections register. This could not be done even during assessment proceedings also. It was observed that the assessee had inflated the expenses on account of salary paid to the employees. The assessing officer rejected the books of account under Section 145 Income Tax Appeal No. 876 of 2008 3 and completed the assessment at the income of Rs. 20,06,680/- under Section 143(3) of the Act vide order dated 26.3.1999. The Commissioner of Income-tax (Appeals) {in short “the CIT(A)”}, partly allowed the appeal carried by the assessee vide order dated 28.7.2000. The CIT(A), deleted the addition of Rs. 17,74,625/- made by the assessing officer on account of suppression of receipts. While doing so, it was observed that the assessing officer had not pointed out any material defect in the books of account produced before him. His estimate of receipts of the cable connections for all the Sectors i.e. 14, 16 and 17 was purely on a guess and suspicion and he had not given any instance for any omission in the receipts either with reference to the receipts books or with reference to the books of account. 5. Aggrieved by the order of the CIT(A), the Revenue preferred appeal before the Tribunal but the same was dismissed vide the order under appeal. 6. We have heard learned counsel for the appellant and have perused the record. 7. The issue in this case is, whether the CIT(A) and the Tribunal were right in deleting the addition of Rs. 17,74,625/- made by the assessing officer as receipts which were suppressed by the assessee and whether the said amount was exigible to tax? 8. Learned counsel for the Revenue submitted that the finding recorded by the CIT(A) and affirmed by the Tribunal is the result of mis-reading of evidence and, therefore, the same deserves to be set aside. Income Tax Appeal No. 876 of 2008 4 9. We have given our thoughtful consideration to the submission made by the learned counsel for the Revenue and are unable to accept the same. It would be expedient to refer to the finding recorded by the CIT(A) which read thus: “I have carefully gone through the assessment order, written submissions dated 23.5.2000 and 19.6.2000 of the assessee’s Ld. counsel. I have also gone through the written reply of the AO. I find that the AO has not pointed out any material defect in the books of account produced before him. His estimate of receipts of the cable connections for all the sectors i.e. 16, 17 and 14 is purely on a guess and suspicion. He has not given any instance for any omission in the receipts either with reference to the receipts books or with reference to the books of account. Since no positive defect in the books of account have been mentioned in the assessment order or highlighted in the written reply, I am satisfied that the addition made at Rs. 17,74,625/- allegedly on suppression of receipts, is not justified, either on facts and in law. The addition of Rs. 17,74,625/- is, thus, cancelled. The assessee is, thus, entitled to relief of Rs. 17,74,625/-. Ground No.1 is allowed.” 10. The Tribunal while affirming the said finding has held in para 6 of its order as under: “We have considered rival submissions. When the assessee had not produced any cable connection register, there is no basis available to the AO to estimate Income Tax Appeal No. 876 of 2008 5 the number of connections issued by assessee. However, the receipts issued in respect of each connection were produced. The same were rejected merely because the name of subscriber is not mentioned or the full signature of the employee has not been mentioned. However, the facts remains that in this line of business, names are not mentioned in the receipts but as a proof of identity, the house numbers and sector is mentioned. The receipts are generally initialled only and neither the issuer of receipt nor the payer of the amount denies having paid the amount stated in the receipt. In the circumstances, the AO cannot reject the receipts issued on this flimsy ground that full signature of the employee who had actually issued receipt was not verifiable. The same could have been put to the assessee and who could have offered valid explanation in this regard. In the circumstances, we do not find any valid reason to reject the book results so as to sustain the addition made by the AO.” 11. The Tribunal while affirming the findings of CIT(A) had recorded that the assessee had produced receipts issued in respect of each connection and the assessing officer had adopted the method of estimation without there being any rational basis to support the guess work. Further, no specific defect in the books of account had been pointed out warranting rejection thereof. Learned counsel for the Revenue was unable to demonstrate that the conclusions recorded by CIT(A) and the Tribunal are perverse in any manner. We find that the findings recorded by the CIT(A) and Income Tax Appeal No. 876 of 2008 6 approved by the Tribunal being based on record do not call for any interference. The substantial question of law is, thus, answered against the Revenue. 12. In view of the above, there being no merit in the appeal, the same is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) May 30, 2011 ACTING CHIEF JUSTICE *rkmalik*