2008 (10) TMI 678 - HC - Income Tax

Summary

Issues involved:
The issues involved in the judgment are:
1. Whether the Income-tax Appellate Tribunal was correct in deleting the addition made by the Assessing Officer and confirmed by the Commissioner of Income-tax (Appeals) regarding outstanding creditors for freight under section 69C of the Income-tax Act, 1961 for the assessment year 2003-04.
2. Whether the impugned order passed by the Income-tax Appellate Tribunal was perverse or not.

Issue 1: Addition of Outstanding Creditors for Freight

The Assessing Officer disallowed/added back a sum of &8377; 71,57,277 towards outstanding creditors for freight under section 69C of the Income-tax Act, 1961, for the assessment year 2003-04. The Assessing Officer contended that the expenses claimed as outstanding towards freight charges payable were not real and genuine as the assessee failed to produce the creditors for verification. This disallowance was confirmed by the Commissioner (Appeals).

Issue 1 Details: Tribunal's Decision

Upon appeal, the Income-tax Appellate Tribunal deleted the addition. The Tribunal noted that the assessee maintained primary and subsidiary records such as lorry receipt registers, vouchers, and details of Tax Deducted at Source, which were found to be in order. The Tribunal observed that the Assessing Officer's rejection of vouchers as internally generated was unwarranted, as the vouchers were signed by recipients and verifiable. The Tribunal also highlighted that complete details of Tax Deducted at Source were available, and entries in regular books of account were maintained chronologically. The Tribunal further pointed out that the Assessing Officer failed to provide evidence to support the conjecture of cash payments, as subsequent payments were made by Account Payee Cheques. Based on a comprehensive review of the evidence, the Tribunal concluded that the addition should be deleted.

Issue 1 Conclusion: Tribunal's Decision Upheld

The High Court upheld the Tribunal's decision, stating that there was no legal infirmity in the Tribunal's order to warrant interference. The Court found no evidence of perversity in the order, as there was no indication of consideration of irrelevant evidence or ignoring relevant evidence. As no substantial question of law arose from the Tribunal's order, the appeal was dismissed.

Issue 2: Perversity of the Impugned Order

The second issue raised was whether the impugned order passed by the Income-tax Appellate Tribunal was perverse or not. This question was considered in light of the Tribunal's decision to delete the addition of outstanding creditors for freight.

Issue 2 Conclusion: No Perversity Found

The High Court determined that there was no perversity in the impugned order of the Tribunal. The Court noted the absence of any evidence indicating the consideration of irrelevant evidence or the ignorance of relevant evidence. As no legal infirmity or substantial question of law was identified, the appeal was dismissed.