2007 (2) TMI 131 - HC - Income Tax

Assessment AO contended that assessee was not showing complete sales before the CTD and was not making payment of sales tax on the complete sales raised the total income of assessee Matter remitted to AO for reconsideration

Summary

Issues:
Challenging order of Income-tax Appellate Tribunal under section 260A of the Income-tax Act, 1961 regarding reassessment proceedings for escaping assessment and concealment of turnover leading to taxability.

Analysis:
The High Court of Jharkhand heard multiple appeals together involving a common question of law and facts. The appeals challenged the order of the Income-tax Appellate Tribunal, Patna Bench, which dismissed the appeal filed by the Revenue and allowed cross-objections filed by the respondent-assessees under section 260A of the Income-tax Act, 1961. The respondent-assessee derived income from dealing in vegetable oil and edible oil, including commission on sales. Allegations were made that the respondent underreported sales figures in Form No. F, resulting in lower sales tax payments. The Assessing Officer initiated reassessment proceedings under section 147 of the Act based on information from the Commercial Tax Department. The Commissioner of Income-tax (Appeals) partly allowed the appeals, prompting the Revenue to appeal to the Tribunal.

The Revenue contended that the Tribunal erred by not considering trading receipts as income, failing to acknowledge sales tax collected by the assessee, and expunging a crucial paragraph from the Commissioner's order. On the other hand, the respondent argued that no substantial question of law was involved in the appeal. The respondent was accused of underreporting turnover to evade sales tax payments. The Commissioner of Income-tax (Appeals) found merit in reopening the assessment under section 147 but emphasized the need for concrete evidence of tax collection before making additions to the income. The Tribunal upheld the Commissioner's findings on additions but canceled interest charges, leading to the High Court's intervention.

The High Court held that the Tribunal erred in law by expunging a crucial paragraph from the Commissioner's order. It emphasized the necessity for the Income-tax Department to substantiate claims of uncollected sales tax before making additions to the income. The Court agreed with the Commissioner's approach and set aside the Tribunal's order, restoring the Commissioner's decision. Additionally, similar appeals were remitted back to the Assessing Officer based on the order in the primary appeal. Justice D.K. Sinha concurred with the judgment.