2024 (4) TMI 601 - HC - Income Tax

Revision petition u/s 264 by assessee - contention of the petitioner was negated by passing the order in the absence of any proper material being placed on record by the petitioner to establish that there was expenditure incurred in relation to earning income - as argued when the money was collected by the petitioner from farmers and repaid to the rig owners, the petitioner has acted as only a collection agent and there cannot be any income that has been derived by the petitioner and the said aspect of the matter has not property considered by the Commissioner of Income Tax HELD THAT - In the first place, there is no material on record to show that there was income derived by the petitioner by doing business. According to the petitioner, he was only a collection agent. The previous year returns and the relevant year business would only go to show that he was running vulcanizing shop and he could not have derived so much of income from his business. Nevertheless, it was for the petitioner to place on record necessary documents before the Commissioner of Income Tax so as to consider the case of the writ petitioner in a proper manner while exercising the revisional jurisdiction u/s 264 of the I.T. Act. As settled principles of law and requires no emphasis that the power of the revisional authorities is not as vide as an appeal and therefore, in was incumbent on the part of the petitioner to place clinching material on record so as to revise the order of assessing authority by exercising the power under Section 264 of the I.T. Act. The petitioner having not placed on record such clinching material to show that what is the amount of money exactly derived, who are the persons who are land owners, who said to have dug the borewell in their lands and what exactly the charges that has been paid by him to rig owners, except producing the Bank statement as is rightly contended by the learned counsel for the respondents, the impugned order was inevitable. Petitioner as seeks one more opportunity for the petitioner to place on record the necessary material before the Commissioner of Income Tax and requests the Court to set aside the impugned order and provide one more opportunity for the petitioner to place necessary clinching evidence so as to show that there was no income derived by him or to explain the alleged expenses. Thus the matter is remitted to respondent No. 1 - the Commissioner of Income Tax for fresh disposal in accordance with law.

Summary

Issues Involved:
The issues involved in this case include challenging an assessment order under Section 264 of the Income Tax Act, 1961, regarding the determination of income derived by the petitioner from his business as a collection agent, and the subsequent revision petition filed before the Commissioner of Income Tax.

Summary:

Assessment of Income:
The petitioner, running a vulcanizing shop, collected money from landowners for borewell digging, showing an income of Rs. 1,99,686/- in his return. However, the income tax authorities claimed his income for the year to be Rs. 59,04,180/- based on bank account details. The petitioner argued that he acted only as a collection agent and had significant expenditures paid to rig owners, totaling Rs. 56,80,532/-. The Commissioner's order under Section 264 was challenged in the writ petition.

Contentions and Decision:
The petitioner contended that he was merely a collection agent and did not derive substantial income from his business. The court noted the lack of material to establish the income derived by the petitioner. While acknowledging the limited scope of revisional authority under Section 264, the court emphasized the necessity for the petitioner to provide conclusive evidence to support his case. As the petitioner failed to produce such material beyond bank statements, the impugned order was upheld.

Court's Order:
The court allowed the writ petition, quashed the order at Annexure-H, and remitted the matter to the Commissioner of Income Tax for fresh disposal. The petitioner was directed to appear before the Commissioner with necessary documents by a specified date, with the revision to be concluded by a set deadline. The court granted the petitioner an opportunity to present additional evidence to clarify the income derived or explain the alleged expenses.

This summary encapsulates the key aspects of the judgment, including the assessment of income, contentions raised by both parties, the court's decision, and the subsequent order issued by the court for further proceedings before the Commissioner of Income Tax.