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26-11-2018, MATHUR MARKETING, Section 131, 114, HIGH COURT OF DELHI

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1 week 5 days ago #7865 by amit
Section - 131, 114, 250(4), 46A, 260A
Order Date - 26-11-2018
Favouring - Revenue
Court - HIGH COURT OF DELHI
Appellant - MATHUR MARKETING PVT. LTD.
Respondent - CIT
Justice - S. RAVINDRA BHAT & A.K.CHAWLA
Citation - 1218Taxpundit13
Appeal No. - ITA No.90/2004
Asstt. Year -

Order

PER : S. RAVINDRA BHAT, J.

1. By this judgment, we propose to dispose of an appeal under Section 260A of the Income Tax Act, 1961 (hereafter “the Act”). The original order, disposing of the appeal, was of 17 January, 2006. That order was carried in appeal by special leave, to the Supreme Court, which disposed of the petition, in the following terms:

"We have heard learned counsel for the parties and perused the impugned order. Vide order dated 10.08.2017, this Court had permitted the appellant to examine as to whether the oral arguments were advanced on substantial question No.3 raised in the Memo of Appeal filed before the High Court under Section 260A of the Income Tax Act, 1961. An affidavit· has been filed on behalf of the appellant in which it has been stated that the issue of powers of Commissioner (Appeals) had come in appeal under Rule 46A and were specifically raised before the High Court. 'In that view of the matter, in our considered opinion, if indeed such issue was raised specifically before the High Court and it has not been taken into consideration by the High Court by passing the impugned order dated 17.01.2006, the appropriate remedy for the appellant would be to file an application for review of the said order.

Accordingly, we permit the appellant to file a review application before the High Court within two weeks from today. If such an application is filed, the same shall be considered in accordance with law without raising the question of limitation.”

All the questions raised in this appeal are left open to be raised again, if occasion so arises. The Civil Appeal is disposed of with aforesaid observations.''

2. In the appeal, under Section 260A, several questions of law were urged. The one relating to additional evidence, read as follows:

“Whether in the absence of any ground against admission of additional evidence, the Tribunal was right in law in holding that the CIT(A) was not entitled to consider the evidence of payment to the commission agent;”

3. The original order of this court, dismissing the appeal, reads as follows:

“Sub-Section (3) of Section 145 of the Income Tax Act, 1961 empowers an assessing officer to proceed to make assessment of the total income or loss to the best of his judgment and determine the sum payable by the assessee, as envisaged under Section 144, in a case where he is not satisfied about the correctness or completeness of the accounts of the assessee or where the method of accounting provided in sub-Section (1) or accounting standards as notified under sub-Section (2) have not been regularly followed by the assessee. In the present case, we are not concerned with latter situation. Clearly, it is only in the eventuality of the assessing officer not being satisfied about the correctness or completeness of the accounts of the assessee that he can exercise his discretion of making the assessment based on best of his judgment. Conversely, therefore, where the assessing officer is satisfied about the correctness of entries relating to profit-making transactions, he cannot proceed to make assessment based on best of his judgment. In the circumstances, the argument advanced on behalf of the assessee that while ignoring the two loss-making entries in its books of account, the assessing officer could not have proceeded to accept the entries relating to profit-making transactions, cannot be appreciated. Since the assessee had in its return voluntarily made mention of the two profit-making transactions which came to be accepted by the assessing officer, it could not turn around to question the correctness of disclosure regarding profit-making transactions in its return and that of related entries in respect thereto in its books of account simply because the assessing officer doubted the correctness of the two entries pertaining to loss-making transactions and, consequently, proceeded to make the assessment to the best of his judgment. The books of account or any other material produced before the assessing officer by the assessee were simply meant to support the disclosure of profit or
loss set out in its return and it was always open to the assessing officer to scrutinize such material or entries in the books of account before accepting the same for the purpose of assessment. There is, thus, no merit in the contention on behalf of the assessee that the assessing officer could not have disregarded the two entries pertaining to loss-making transaction while accepting the other two entries in the books of account relating to profitmaking transactions. The tribunal was, in the circumstances, justified in repelling the contention so raised.”

4. By the order of 17 January, 2017, this court had admitted the appeal and clarified that it was confined to the question pertaining to Rule 46A – i.e. whether the ITAT was correct in holding that the Appellate Commissioner was not entitled to consider the evidence of payment to the commission agent. Thus, the present appeal is confined to that question of law.

5. The facts are that the assessee traded in rice. In relation to some of its transactions, the assessee claimed loss. All the transactions of purchase and sale were carried by the assessee through M/s Ramkishan Dass Narender Prakash who acted as commission agent on the assessee’s behalf. The

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