1. In all these appeals, since common question of law and facts are involved, they have been heard together and are disposed of by this common order.
2. These appeals have been filed under Section 260A of the Income Tax Act 1961 challenging the order passed by the Income Tax Appellate Tribunal, Patna Bench, Patna whereby the tribunal dismissed the appeal filed by the Revenue and further allowed cross objection filed by the respondent-assessee.
3. For better appreciation of the fact of the case, first of all we shall take up Tax appeal No. 9/02. Respondent-Assessee derives income from dealing in vegetable oil and edible oil etc. Respondent also derives income from commission on sale of edible oil received from various manufacturers of States other than erstwhile Bihar. Respondent used to issue Form F for all such goods to the consignor and on the basis of this Form F, the consignor used to get rebate from sales tax on the consignment sale in his own State. The allegation against the respondent was that he in the counter foil of Form F used to enter lower price of goods than the actual price sent to the consignor and thereby used to pay sales tax on the basis of lower figure of sale entered in the counter foil in Form F maintained by the respondent-assessee. On the basis of return of income tax filed by the respondent-assessee for the period 1988-89,1989-90,1990-91, 1991-92 and 1992-93 assessment were made under Section 143(1) of the Act. However, on receipt of information from the Commercial Tax Department, Govt. of Bihar, the Assessing Officer issued show cause notice to the respondent as to why reassessment proceeding should not be initiated under Section 147 of the Act for escape assessment. Notices were issued under Section 148 of the Act with the approval of the Commissioner of Income Tax, Ranchi. Notices under Section 142(1) was also issued to the respondent for production of books of account and for furnishing details of sales and consignment sales. The Assessing Officer, however, completed the assessment and added following income:
Sl. No.
A.Y.
Returned
Assessed
Addition
Income
Income
made
(Rs.)
(Rs.)
(Rs.)
1.
1988-89
35,650
386,665
351.015
2.
1989-90
45,55.0
546,356
500,816
3.
1991-91
56,000
1,123,936
1,067,936
4.
1991-92
40,350
1,274,090
1,233,740
5.
1992-93
28,440
1,566,496
1,538,056
4. Aggrieved by the said assessment, respondent-assessee preferred appeal before the Commissioner of Income Tax (Appeal) Ranchi which was registered as Tax Appeal No. 32, 33, 34, 35, 36 of 2001. The Commissioner of Income Tax (Appeal) (in short CIT Appeal) after hearing the parties partly allowed the appeals and held that the matter needs reconsideration by the Assessing Authority. The appellant-Revenue, aggrieved by the said order of CIT (Appeal), moved the Income Tax Appellate Tribunal by filing appeals, which were registered as Tax Appeal nos. 165,166,167 and 169 of 2001. The Appellate Tribunal after hearing the parties dismissed all the appeals and also allowed the cross objection filed by the assessee against the finding recorded by the CIT(Appeal) on some issues.
5. Mr. K.K.Jhunjhunwala, learned counsel for the appellant-Revenue assailed the impugned order passed by the Tribunal as being illegal and wholly without jurisdiction. Learned counsel submitted that the Tribunal has completely misdirected itself by not considering the trading receipts as income of the assessee. The Tribunal further failed to appreciate that assessee has collected sales tax in the prince charged by him on the edible oil. Learned counsel submitted that the assessee was statutorily bound to pay sales tax and then take exemption under Section 43B of the Act. Learned counsel further submitted that the tribunal ought not to have expunged paragraph 8 of the appellate order passed by CIT (Appeal) which is contrary to the provision of Section 251(1)(a) of the Income Tax Act.
6. Mr. Binod Poddar, learned senior counsel raised preliminary objection that the instant appeal is not maintainable, inasmuch as no substantial question of law is involved. Learned counsel submitted that appellant has not complied the requirement of Section 260A of the Act and preferred this appeal without formulating substantial question of law. Learned counsel further submitted that as a matter fact, no substantial question of law is involved and therefore, the instant appeal is liable to be dismissed. In this regard learned counsel relied upon various decisions of different High Courts.
7. As noticed above, the respondent is an assessee and deals in edible oil. Respondent filed his return of income. Subsequently, it game to the notice of the income tax authorities that respondent was consignment agent of various edible oils supplied outside the erstwhile State of Bihar. In this process, the respondent used to issue 'Form F' for all such goods to the consignor- supplier and the consignor supplier used to get rebate on sales tax on consignment sale in its own State. It was held that respondent in counter foil of 'Form F' used to enter lower figure of sale on the consignment than the actual figure sent to the consignee and used to pay sales tax on the basis of lower figure of sales recorded in the counter foil of the 'Form F'. The Assessing Officer, therefore, proceeded by observing that respondent was not showing complete sale before the Commercial Tax Department and he was not making payment of sales tax on the complete sale. Respondent was, therefore, confronted to explain as to why the complete turnover was not shown before the Commercial Tax Department. The Assessing Officer, therefore, raised total income of the assessee. In appeal by the respondent-assessee, the CIT(Appeal) has re-appreciated the entire facts of the case and observed as under :
I have considered the facts and circumstances of the case as well as the written submission of the learned counsel so far reopening of assessment Under Section 147 of the Act is concerned, I have lease hesitation in saying that the Department has a very good case for reopening the closed assessment Under Section 147 of the Act. The commercial tax Department could lay hands on concealed transaction and it gave information to the IT. Department that the turnover has been suppressed. The assessing officer had, therefore, sufficient material to reopen the case Under Section 147 of the Act. Now comes the question of taxability of impugned sum of concealed turnover before the commercial tax Department. The assessing officer has observed that the appellant might have collected sales tax on the concealed turnover and which was not disclosed to the commercial tax Department and has enjoyed it. At this juncture, learned counsel Sri S.K.Poddar, Advocate has objected by saying that it is only conjecture and surmise and there is no material on record to suggest that the sales tax had been collected and pocketed by the appellant. So far the commission and disclosed in the IT. return as concerned, vis-a -vis total consignment sale made even as per the commercial tax Department is correct and fully verifiable. There is no discrepancy in respect of 'arhat' commission vis-a-vis consignment sale. The learned counsel has also submitted. that the Department has also not pointed out any discrepancy.
8. The CIT(Appeal) further held that unless the Income Tax Department proves by material fact that sales tax have, in fact, been realized and not paid, no addition can be made by resorting to surmises. In this connection, the Appellate Court further observed in paragraph 8 of the order as under:
To conclude the matter, I am of the opinion that the Department should be given an opportunity to examine as to whether commission disclosed by the appellant is commensurate with the total consignment sale made by the appellant. The Department can make an enquiry from the concerned parties and if any discrepancy is found, the Department can definitely proceed to make addition.
9. The appeal was partly allowed by the CIT (Appeal) with the observation quoted herein above. Aggrieved by the said order, the respondent/Assessee filed second appeal before the appellate tribunal. Although the tribunal agreed with the finding recorded by the CIT(Appeal) on the question of addition but at the same time expunged paragraph 8 of the order passed by the CIT(Appeal), which has been quoted herein above. The Tribunal observed:
I have considered the whole gamut of facts and I find that the Act itself says vide Explanation-2 to Section 139B an 'where, it relation to the A.Yr. the assessment is made for the first time Under Section 147, the assessment so made shall be regarded as regular assessment for the purpose of Sub-section-1 in this case the assessment was first made Under Section 143(3) and assessment Under Section 147 gas bit been made for the first time. Thus, Explanation-2 is not attracted. Interest no charged is hereby cancelled.
10. The CIT(Appeal) in its order considerea me submissions of the assessee that Sales Tax Collector on the disclosed turn over has found that sales tax has been duly reflected in the books of accounts and was paid to the C.T.D. The C.I.T. (Appeal) also took notice of the case of the appellant that no sales tax was realized since all the cash-memo issued are for the net price of the goods sold and after deducting expenses and the commission receivable by the consignee, the balance amount was remined by bank draft to the consignor. Noticing these facts the court of appeal held that unless Income Tax Department proves by material facts that sales tax have, in fact, been realized and not paid, no addition can be made. For the said reason, the court of appeal held that the Department should be given opportunity to examine as to whether commission disclosed by the appellant was commensurate with the total consignment sale made by the appellant. The court of appeal further held that Department can make an enquiry from the concerned parties and if any discrepancy is found, it can definitely proceed to make addition. In our view, the appellate tribunal has erred in law in expunging paragraph 8 of the order passed by C.I.T. (Appeal). Even in course of argument, respondent-assessee tried to impress this Court by filing affidavit alongwith receipts and cash memos to substantiate that no such sales tax was collected and/or allegation levelled by the Revenue is without any basis. In our view, the matter needs consideration afresh by the Assessing Officer who shall record a fresh finding on the basis of materials collected or available on record. We, therefore, fully agree with the view taken by the C.I.T.(Appeal).
11. The impugned order passed by the Appellate Tribunal, therefore, needs interference by this Court. This appeal is, therefore, allowed and the impugned order passed by the tribunal is set aside and the order passed by the C.I.T.(Appeal) is restored.
12. So far other appeals being Tax Appeal Nos. 15, 28, 29, 31, 33, 35, 36,38, 27, 42, 40 and 45 of 2003 involving similar facts are concerned, the tribunal, in the order held that the said appeals shall be governed by the order passed in the appeal from which T.A.No. 9/02 arises.
13. In the aforesaid facts all these appeals are allowed and the order passed by the Tribunal are set aside. The matter is remitted back to the Assessing Officer in terms of the order passed in the CIT appeals in Appeal Nos. 32/2000-01 and other analogous appeals.