Commissioner of Income Tax Vs. Puneet Udyog - Court Judgment

Excerpt:
- administrative law - government contract: [vijender jain, c.j., rajive bhalla & sury kant, jj] government contract rejection of highest bid challenge as to held, state has no dominus status to dictate unilateral terms and conditions when it enters into contract. its actions must be reasonable, fair and just in consonance with rule of law. as a necessary corollary thereto, state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. the state is free to enter into a contract just like any other individual and the contract shall not change its legal character merely because other party to contract is state. though no citizen possesses a legal right to compel state to enter into a contract, yet latter can neither pick and choose any person arbitrarily for entering into such agreement nor can it discriminate between persons similarly circumstanced. similarly, where breach of contract at hands of state violates fundamental rights of a citizen or its refusal to enter into a contract is contrary to statutory provisions or public duty, judicial review of such state action is inevitable. likewise, if state enters into a contract in consonance with article 299 rights of the parties shall be determined by terms of such contract irrespective of fact that one of the parties to it is a state or a statutory authority. for these precise reasons the equitable doctrine of promissory estoppel has been made applicable against the government, as against any other private individual, even in cases where no valid contract in terms of article 299 was entered into between the parties. hence, if government makes a representation or a promise and an individual alters his position by acting upon such promise, the government may be required to make good that promise and shall not be allowed to fall back upon the formal defect in the contract, though subject to well known limitations like larger public interest. the state, thus, has no dominus status to dictate unilateral terms and conditions when it enters into contract and its actions must be reasonable, fair and just and in consonance with rule of law. as a necessary corollary thereto state cannot refuse to confirm highest bid without assigning any valid reason and/or by giving erratic, irrational or irrelevant reasons. -- consumer protection act, 1986 [c.a. no. 68/1986]. articles 14 & 300a: government contract noon-acceptance of highest bid held, it does not result in taking away right to property of highest bidder highest bid, per se, unless it is accepted by competent authority, and consequential sale certificate is issued, does not grant the highest bidder right to property of type which is protected under article 300a right to property is limited to confer highest bidder the right to challenge action of appropriate authority in refusing to accept highest or other bids. [air 1984 p&h 282 (fb) explained] articles 14 & 226: government contract rejection of highest bid held, highest bidder has locus standi to maintain writ petition and assail action of state government or its authorities by contending that his bid has been turned down for arbitrary, illegal or perverse reasons however in such matters, heavy onus would like on petitioner bidder to establish his allegations as state action shall always be presumed to be in accordance with law - 6,12,430/-made by assessing officer out of total fuel and firewood expenses by holding that assessing officer was not able to bring on record any additional circumstances different from the earlier years where such expenditure has been accepted and allowed disregarding the fact that the assessee has failed to establish the genuiness and identity of the concerned suppliers? dr has not been able to rebut/controvert this finding of fact as well as the other findings recorded by the ld. cit(a) while deleting the disallowance made by the ao out of firewood expenses and this being so as well as keeping in view all the facts of the case, we do not find any infirmity in the impugned order of the ld. as clearly noted by the ld cit(a) in his impugned order, this entire documentary evidence filed by the assessee before him was verified by the ld. cit(a) in his impugned order and this being so as well as having regard to all the facts ofd the case, we are of the view that the adhoc disallowance made by the ao out of freight expenses was not sustainable. 4. the concurrent findings recorded by the cit(a) as well as the tribunal are based on appreciation of evidence.adarsh kumar goel, j.1. the revenue has preferred this appeal under section 260a of the income tax act, 1961 (for short, 'the act') against the order dated 8.8.2008 passed by the income tax appellate tribunal, delhi bench 'f' new delhi in ita no. 3410/d/2006 for the assessment year 2001-02, proposing to raise the following substantial questions of law:(i) whether, on the facts and in the circumstances of the case, the ld. itat is right in law in upholding the order of the ld.cit(as) in deleting the addition of rs. 6,12,430/-made by assessing officer out of total fuel and firewood expenses by holding that assessing officer was not able to bring on record any additional circumstances different from the earlier years where such expenditure has been accepted and allowed disregarding the fact that the assessee has failed to establish the genuiness and identity of the concerned suppliers?(ii) without prejudice to question no. 1, whether on the facts and in the circumstances of the case, the ld. itat is right in law in confirming the order of the ld.cit(a) in deleting the addition of rs. 6,12,430/-without considering the fact that expenditure of each year has to be established by the assessee and such establishment is to be based on facts relevant to that year only.(iii) whether on the facts and in the circumstances of the case, the ld. itat is right in law in upholding the order of the ld. cit(a) in deleting the addition of rs. 12,84,515/-made as a disallowance from inward and outward freight expenses solely relying on the grn's (goods return notes) issued by the transporters, whereas the assessing officer made the addition on the basis that no bills were produced for such expenses.?2. the assessee is a soap manufacturer. the assessing officer disallowed claim of the assessee on account of fuel and firewood expenses and also on account of inward and outward freight expenses. on appeal, the addition made by the assessing officer was ordered to be deleted and the said view was upheld by the tribunal. on issue of fuel and firewood expenses, it was observed:however, the claim of the assessee for purchase of firewood was duly supported by documentary evidence in the form of weighment slips and on verification of such slips produced by the assessee before him, it was found by the ld. cit(a) that the assessee has maintained a comprehensive and proper record regarding purchase of firewood. at the time of hearing before us, the ld. dr has not been able to rebut/controvert this finding of fact as well as the other findings recorded by the ld. cit(a) while deleting the disallowance made by the ao out of firewood expenses and this being so as well as keeping in view all the facts of the case, we do not find any infirmity in the impugned order of the ld. cit(a) giving relief to the assessee on this issue.on issue of inward and outward freight expenses, it was observed:as clearly noted by the ld cit(a) in his impugned order, this entire documentary evidence filed by the assessee before him was verified by the ld. cit(a) and it was found by him on such verification that comprehensive and systematic record was maintained by the assessee to show that the freight expenses were incurred wholly and exclusively for the purpose of its business. at the time of hearing before us, the ld. dr has not been able to rebut/controvert this finding of fact recorded by the ld. cit(a) in his impugned order and this being so as well as having regard to all the facts ofd the case, we are of the view that the adhoc disallowance made by the ao out of freight expenses was not sustainable. in that view of the matter, we uphold the impugned order of the ld. cit(a) deleting the said disallowance and dismiss ground no. 3 of the revenue's appeal.3. we have heard learned counsel for the parties.4. the concurrent findings recorded by the cit(a) as well as the tribunal are based on appreciation of evidence.5. no substantial question of law arises.6. the appeal is dismissed.