High Court Of Rajasthan
Jasraj Ganeshmal vs. CIT & Anr.
Section 256(2)
Asst. Year 1985-86
N.N. Mathur & H.R. Panwar, JJ.
IT Ref. No. 7 of 2001
14th November, 2002
Counsel Appeared
Rajendra Mehta, for the Assessee : Sundeep Bhandawat, for the Revenue
JUDGMENT
N.N. MATHUR, J. :
This reference application at the instance of the assessee M/s Jasraj Ganeshmal is filed under s. 256(2) of the IT Act seeking direction to call questions of law formulated in para 12 of the application arising from the order of the Tribunal, Jodhpur, dt. 12th April, 2001.
The brief facts of the case are that the assessee-firm is mainly a commission agent selling Deshi Ghee of various brands on Arhat/commission basis. During the year under consideration, the assessee made sales of Deshi Ghee on Arhat/commission to the tune of Rs. 191.61 lacs. The assessee also made sales on assessee’s own account during the year to the tune of Rs. 110.97 lacs. The assessee showed commission receipts of Rs. 4,22,391 as against Rs. 2,45,000 for the immediately preceding year. According to the assessee, immediately on effecting sale of consignor, the assessee sends sale list containing various details like date of sale, name of articles, number of tins, net weight, amount of sale consideration, details of expenses, etc. to the consignor/principal. The assessee deducts its commission @ 1 per cent out of sale consideration and remits the balance to the consignor/principal. During the assessment proceedings for asst. yr. 1984-85, under appeal, the AO found certain transactions made by the assessee with two sister concerns’ name (i) Sancheti Trading Co., (ii) M/s Abhay Sales Agency, a proprietary concern of Shri Narendra Kumar and one outsider named Shri Parasmal Kanaji to be sham and bogus just to avoid tax effect. The AO made addition of Rs. 2,73,809 treating the same as concealed income of the assessee in the shape of profit diverted in the name of Parasmal Kanaji and connected sister concerns.
The CIT(A) by order dt. 26th March, 1990, confirmed the addition and dismissed the appeal. He found that concerns referred by the AO i.e., Sancheti Trading Co., M/s Abhay Sales Agency and Parasmal Kanaji were brought into picture only with a view to give a colour of genuineness to the so-called transactions and in reality the transactions in question pertained to the assessee. On further appeal, the Tribunal agreed with the conclusions drawn by the first appellate authority and found that goods were not actually handed over to various parties and the assessee has only tried to reduce its total income. The assessee-applicant moved an application under s. 256(1) of the IT Act before the Tribunal for referring the question of law set out in the application for the opinion of this Court. The said application was rejected on the ground that findings arrived at are findings of fact and no referable question of law arises.
It is contended by Mr. Rajendra Mehta, learned counsel for the assessee-applicant that Parasmal Kanaji is a reputed businessman dealing as speculator in shares, foodgrains, oils, deshi ghee, gwar, etc. The said concern purchased deshi ghee from Sancheti Trading Co. and Abhay Sales agencies and subsequently sold deshi ghee to the assessee. The said concern Parasmal Kanaji is absolutely unrelated to the assessee. All the transactions of the said concern were also duly recorded and profit earned duly disclosed and assessed after scrutiny and verification.
In view of this, the income earned by the said three assessees stood declared and assessed in their respective hands. Thus, there was no diversion of income of the assessee to the said firms and there was nothing to show that income of the said firms flowed back to the assessee. Thus, it is submitted that the said concerns are independent assessees duly recognised, accepted and assessed by the Department in their respective capacities. As the sales and purchases between the assessee and the parties were duly accounted for and supported by necessary verifiable documentary evidence including bills or invoices, the authorities committed error treating the transactions entered between the parties as Benami.
On the other hand, Mr. Sundeep Bhandawat, learned counsel appearing for the Revenue submitted that the order of the Tribunal is an affirming order and the contentions raised have been dealt in great depth and detail in the order of the CIT(A). He has read before us the order of the CIT(A). Having read the order of CIT(A) and the order of the Tribunal, we are satisfied that no referable question of law arises. However, for the sake of reference, it will be convenient to extract the relevant portion of the order of CIT(A) as follows: “After due consideration of the different facts referred to in the impugned assessment concerned authority was well justified in that otherwise was liable to be paid by of the contentions of the appellant is that these different concerns namely, agencies were independent concerns doing concern namely Shri Parasmal Kanaji was also an independent entity having no connection whatsoever with the appellant, the contentions so raised can hardly survive if one tries to go behind the veil of the modus operandi so adopted by the appellant which otherwise will clearly indicate that the appellants main purchase as objection was to divert the profit with ulterior motive as referred to in the impugned assessment order. It may be that the sister concerns were brought into existence by execution of the partnership deal or by way of proprietorship concern and were also given a different number for the purpose of income-tax assessment but while completing the assessment or treating a particular concern as a genuine concern the facts in regard to the dubious nature of the transactions were not within the knowledge of the Department and it is on account of this, the claim in regard to the genuineness of the firm or of the proprietorship of the concern appears to have been not taken up in the correct perspective. It may be that these concerns were subjected to tax on earlier occasion but merely on this basis, there cannot be any locus standi to say that the transactions so done by these concerns were belonging to themselves and thereby there was no justification in deriving an adverse inference. This is particularly in view of the fact that the very nature of transaction as detailed in the impugned assessment order by making a separate analysis of the various transactions clearly indicates that the sister concerns or Sh. Parasmal Kanaji were brought into picture only with a view to give a colour of genuineness to the so-called transactions even though in reality the transactions in question were really pertaining to the appellant and no one else. The so- called sale bills, etc. could not have been taken for granted as a reliable piece of evidence if the into consideration. The facts on record indicated that even though certain Agencies, there is no iota of evidence to indicate that any expenditure or transportation of the goods has really been incurred by any of the concerns so as have really changed hands from the appellant to the sister concerns or from the sister concerns to Sh. Parasmal Kanaji certain transactions dt. 21st May, 1984, 26th May, 1984, and 28th May, 1984, from the appellant to Sancheti Trading Co. from Sancheti Trading Co. to Parasmal Kanaji and from Parasmal Kanaji to appellant respectively. It is seen that no details whatsoever in regard to the expenses by way of transportation or by way of Mazdoori are available and this would bear an ample testimony to the fact that the goods have not really been transported by way of delivery or taking possession of and this would indicate in clear terms that the sister concerns were brought in only with a view to give the transactions a colour of genuineness and with a view to hoodwink the Department. So is the case with regard to the transactions dt. 26th May, 1984, 2nd June, 1984, and 4th June, 1984, pertaining to the transactions from the appellant to Abhay Sales Agencies, from Abhay Sales Agencies to Sh. Parasmal Kanaji and from Parasmal Kanaji back to the appellant respectively. It may be stated here that in regard to the transactions on the last date i.e. 4th June, 1984, as referred to supra even though there is an expenditure of Rs. 12 by way of Mazdoori in the books of account of the appellant there is no evidence to indicate that this expenditure was on account of the particular transaction in question or the purpose for which the Mazdoori was paid or about the place of godown the number of tins transported, etc. No voucher is also available in regard to this transaction. In view of this, even the so-called expenditure of Rs. 12 debited in the books of the appellant can hardly come to its rescue so as to warrant a different presumption than what has been referred to in the impugned assessment order. In regard to the transactions dt. 31st Aug., 1984, 1st Sept., 1984, and 3rd Sept., 1984, pertaining to the dealings by the appellant to the Sancheti Trading Co. by Sancheti Trading Co. to Parasmal Kanaji and by Parasmal Kanaji to the appellant respectively, it is seen that even though an expenditure of Rs. 227 is shown in the books of M/s Sancheti Trading Co. on 1st Sept., 1984, and another expenditure of Rs. 12 is shown in the books of the appellant but no specific details whatsoever are available so as to indicate that this expenditure was in regard to transportation of goods in question taken to one party to another.”
6. In view of the aforesaid, no referable question of law arises. The reference application is rejected.
[Citation : 260 ITR 347]