9911796707
TMI Blog1982 (4) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... Smt. Shanti Devi W/o Shri Babu Ram 5 annas 8 annas 2. Smt. Sneh Prabha . . W/o Shri Puran . . Chand 5 annas 8 annas 3. Shri Niranjan Kumar . . minor son of Shri . . Nand Lal 6 annas — Shri Nand Lal, who is a partner in the assessee firm acts as Manager of the sister concern because of the close relationship of the partners involved therein. However, it is accepted by the revenue that both the firms are genuinely constituted and have been granted registration for this under appeal. Shri Nand Lal is paid salary by M/s. Niranjan Trading Company and this salary is determined at 10 per cent of the net profit income as per profit and loss account before deduction of his salary and this has been allowed in the assessment year under appeal in computing the income of that concern as stated by Shri D. S. Gupta, the ld. counsel for the assessee, at the Bar. The business of the sister concern is that of purchase and sale of cotton only. It is also a common ground that there have been commercial transacti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms, namely the assessee and the sister concern. However, according to him, he was acting on behalf of M/s. Niranjan Trading Co. without any instructions or directions of the firm's partners. He had also not kept the partners of the firm of M/s. Niranjan Trading Co., Kotkapura posted with the transactions entered into by him on behalf of that firm. The ITO also noted that there was no stipulation in the agreement dt. 11th Dec., 1967 entered into between Smt. Shanti Devi on behalf of the firm and Shri Nand Lal, a copy of which had been furnished and placed on the file of the ITO, to this effect. The ITO came to the conclusion that, "in a clandestine move, the assessee has diverted its own profits to the allied concern M/s Niranjan Trading Co., Kotkapura on the sales of 200 bales of cotton and thereby made an attempt to mitigate its tax liability". He, therefore, brought the said profit of Rs. 40,728 into the total income of the assessee for purpose of tax. The total income of the assessee was determined by the impugned order dt. 26th March, 1977 at Rs.1,44,668 before deduction of firm's tax amounting to Rs. 22,484. The divisible income was Rs. 1,22,184. 6. This assessment also inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and kins being partners there, the transactions should not be viewed with suspicion. He emphasised that but for this transaction all other commercial transactions with that party had been accepted in the past and the assessment raised accordingly. Therefore, it was contended, there was no case for making the addition by the ITO as done and there was no reason for the CIT (Appeals) to have sustained it. 9. The ld. Counsel for the assessee submitted that the assessee was following financial year as the previous year. However, M/s. Niranjan Trading Co. was having year ending 31st July as the previous year. Therefore, the transactions out of which the profit of Rs. 40,728 accrued to M/s. Niranjan Trading Co. Kotkapura, fell for consideration in the asst. yr. 1972-73. The assessment for the year 1972-73 in the case of M/s. Niranjan Trading Co. was completed on 13th Jan., 1975 and has become final. He contended that in the case of the assessee, denovo assessment had been made on 26th March 1977 and when this sum of Rs. 40.728 was clubbed into the total income of the assessee, it tentamounted to deliberate double assessment of the same income which is prohibited in law. It was submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds to only reasonable conclusion that the transactions were collusive and the assessee attempted to siphon off its own profits to the sister concern to reduce or avoid incidence of tax. It was particularly pointed out by him that the assessee is not maintaining a Saudha register and though the books of account of the assessee have been accepted, in view of the unverifiable nature of transaction, it cannot be said that what is recorded in the books of account of the assessee and that of its sister concern, is so sacrosanct that is must be accepted as it is. 14. Refuting the charge of the ld. counsel for the assessee that the revenue is attempting double taxation of the same income, it was argued by the ld. Deptl. Rep. That it is open to the assessee to seek such remedies as may be open in law and, therefore, the main argument that a particular amount at a particular point of time is doubly taxed, cannot per se serve a basis of deleting the addition make in the case of the assessee. Therefore, the addition was rightly made and sustained. 15. Both the sides argued that in so far as the other grounds of appeal of the assessee relating to the loss of Rs. 8,753 was concerned, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed and the total income computed on the basis of the books of account and except for making the impugned addition, the books were considered as genuinely written in the ordinary day-to-day business of the assessee. We have, therefore, to examine the transactions with this back ground. 19. It is also now well-settled that a trader is not obliged to make the maximum profit out of a commercial transaction. The proposition is so well settled that no authority is necessary in its support. The ITO when he examined Shri Bhagat Ram, who is the manager of Patel Volkart Ltd., Kotkapura on 14th Dec., 1976, stated in clear cut terms that "goods were delivered to us on 4th Feb 1971 by the M/s. Niranjan Trading Co. through Shri Puran Chand S/o Shri Nand Lal. These goods were lying in the compound of M/s. Patel Volkart Ltd. I did not give any delivery note in respect thereof although on 4th Feb., 1971 itself despatched 50 bales of cotton through truck No. PNV 3921 to Alwar and 50 bales of Delhi Cloth Mills in Truck No. PZP 899 engaged through Truck Union, Kotkapura". This shows the nature of transaction and the fact factually delivery took place. At page 64 onwards is the statement of Shri Kar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rought to the total income of the assessee as its income for the year under appeal. It is deleted. 21. We would like to observe that the statute does not permit double taxation of the same income unless provided as an exception by a fiction of law where disallowance of a particular amount is specifically provided such as in the provisions of s. 40(c) of the Act. But in the case of the assessee, an assessment had been raised in the case of M/s. Niranjan Trading Co. after going through the process of law and has become final by efflux of time. The amount of Rs. 40,728, therefore, already stands taxed in accordance with the provisions of the IT Act. On mere suspicion, conjectures and surmises, the same amount cannot be brought to tax once again in the hands of the assessee which is a separate entity form that of M/s. Niranjan Trading Co. On the peculiar set of facts of this case, this is also a ground for deleting the amount of Rs. 40,728 from the total income of the assessee. On each of the above counts, we delete this amount. 22. Though there has been arguments from both the sides that it was not a deduction claimed by the assessee and disallowed by the revenue but an addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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