2007 (1) TMI 163 - HC - Income Tax

Assessee claimed an expenditure as lease rental payable to various finance companies assessing authority noted that assessee had inflated the claim on the value of cost of acquisition on steel rolls so claim was restricted Commissioner partly allowed the claim of assessee tribunal was justified in noting that cost of steel rolls had not been referred for any valuation tribunal was right in allowing claim by relying on confidential note by Deputy Commissioner for subsequent A.Y

Summary

Issues:
1. Allowance of confidential note in subsequent assessment year
2. Ignoring factual findings of assessing officer

Issue 1: Allowance of confidential note in subsequent assessment year
The case involved the appellant claiming an expenditure of Rs.14.60 lakhs as lease rental payable to finance companies, but the Assessing Authority restricted the claim due to inflated cost of acquisition on steel rolls. The Commissioner of Income Tax Appeals partly allowed the appeal but rejected the cost of acquisition. On appeal before the Tribunal, the assessee relied on a note from the subsequent assessment year 1997-98, which stated that the value of rolls utilized was more than previously estimated. The Tribunal, noting the signature of the Deputy Commissioner on the note, allowed the appeal of the assessee. The Revenue challenged this decision, arguing that the Tribunal erred in relying on a confidential report related to a subsequent year. The Court held that there was no unfairness or illegality in following the opinion expressed in the note, especially since the assessment for the previous year was deemed erroneous in the note. The Court dismissed the appeal, emphasizing the weight given to the note by the Deputy Commissioner.

Issue 2: Ignoring factual findings of assessing officer
The assessing officer had conducted an enquiry and found that the appellant had inflated prices, but the Tribunal, based on the confidential note from the subsequent year, allowed the claim of the assessee. The Revenue contended that the Tribunal erred in extracting the confidential note and should have relied on invoice prices instead. However, the Court found no justification to interfere with the Tribunal's decision, as the note from the Deputy Commissioner deserved weight. The Court dismissed the appeal, emphasizing that the appeal solely questioned the Tribunal's reliance on the Department's view for the subsequent year, which did not raise any substantive legal issue.

In conclusion, the Court upheld the Tribunal's decision to allow the claim based on the confidential note from the subsequent assessment year, emphasizing the weight given to the note by the Deputy Commissioner and dismissing the Revenue's appeal for lack of merit.