V.i.S.P. (P) Ltd. Vs. Commissioner of Income-tax and anr. - Court Judgment

1. This appeal under Section 260A of the Income-tax Act, 1961 (hereinafter for short, 'the Act of 1961'), has been preferred by the assessee against the order passed by the Income-tax Appellate Tribunal on April 15, 2002, in I.T.A. No. 402/Ind of 1995 pertaining to the assessment year 1990-91.

2. Before the Income-tax Appellate Tribunal the assessee had raised three grounds. The Appellate Tribunal did not agree with the contention of the assessee with regard to ground No. 2 (wrongly mentioned as ground No. 3 in para. 9), and affirmed the finding of fact, recorded by the Assessing Officer and the Commissioner of Income-tax (Appeals) with regard to the addition of Rs. 72,100 under Section 68 of the Act. The assessee derived the income from purchase and sales of sintex water tanks, etc., agents of Sinter Plast Containers, Kalol, and Bhopal. During the relevant financial year, the assessee claimed that it had purchased water tanks from Surya Services of Rs. 72,100 and made the entry in the books of account as a liability. The Assessing Officer, after recording the statement of Mr. Anurag Shrivastava, one of the partners of the assessee, who was alleged to be the proprietor of Surya Services and after examining the bank accounts of the Surya Services, found that the whole transaction of alleged purchase by the assessee to be bogus and the entry made in the trade account as a liability, was, only a paper entry. This finding of fact has been affirmed by the Commissioner of Income-tax (Appeals). The Commissioner of Income-tax (Appeals) has held as under ;

'3. The learned authorised representative has contended that Mr. Anurag Shrivastava, one of the partners, is a proprietor of M/s. Surya Services, from whom goods worth Rs. 72,100 were purchased by the appellant and Mr. Shrivastava is responsible for the sales and all the transactions of the appellant. Since Mr. Shrivastava is always on tour and away from Indore, he does not have any knowledge of office administration, accounts, finance etc., and these things are being looked after by Mr. Init Shrivastava. About the possession of tanks of various sizes with M/s. Surya Services from whom the appellant had purchased goods worth Rs. 72,100, it is explained that date of bill is April 3, 1980, and delivery challan is dated March 28, 1989, and March 30, 1989, and cheque dated for payment is April 15, 1989. About the cheque of the Assessing Officer that there was pre-dating of invoices from Surya Services, it is pointed out that the bill was made on transfer of goods and purchases bills were received afterwards and the goods were in the possession of M/s. Surya Services through delivery challan which can be verified from M/s. Sintex Plast Containers, Kalol (N.G.). After considering the facts and submissions of the appellant it is noticed that M/s. Surya Services belonging to the same group was not assessed to tax and its credentials are doubtful and the books of account are stated to be lost when the appellant was cornered about the goods allegedly purchased from that sister concern. For the reasons discussed in detail by the Assessing Officer addition of Rs. 72,100 is in order and upheld.'

3. Against this finding of fact, the assessee preferred an appeal before the Income-tax Appellate Tribunal, who, after examining the documents in detail, found, that no infirmity can be attributed to the order of the Assessing Officer from the Commissioner of Income-tax (Appeals). Thus, the contention of the assessee was rejected.

4. Learned counsel, appearing for the assessee placing reliance on the decision of the Supreme Court reported in Baladin Ram v. CIT : [1969]71ITR427(SC) and the decisions of the Mumbai and Allahabad High Courts reported in CIT v. Bhaichand H. Gandhi : [1983]141ITR67(Bom) and Sundar Lal Jain v. CIT : [1979]117ITR316(All) , respectively, contended, that Section 68 of the Act can be invoked only, when, the books of account of the assessee show the cash entry and not otherwise.

5. We are afraid, such a narrow and restricted interpretation of the provisions, contained in Section 68 was advanced by learned counsel for the appellant/assessee, cannot be accepted. If the liability shown in the said account, which, is found to be bogus and in the absence of any plausible and reasonable explanation offered by the assessee, then, certainly, the amount can be added towards the income of assessee and brought to tax in the hands of the assessee.

6. The reliance placed on the decisions, in our considered opinion, do not apply to the facts and circumstances of the case and are distinguishable.

7. In view of the above discussions, we find no substance and merit in this appeal, as no substantial questions of law is involved which requires answer by this court.

8. Consequently, the appeal fails and, is, accordingly, dismissed.