M-S. ANIS AHMAD AND SONS v. COMMISSIONER OF INCOME TAX (APPEALS), KANPUR & ANR

Citation: [2008] 1 S.C.R. 1021

Court: Supreme Court of India

Bench: P.P. NAOLEKAR, LOKESHWAR SINGH PANTA

Case summary

M-S. ANIS AHMAD AND SONS v. COMMISSIONER OF INCOME TAX (APPEALS), KANPUR & ANR.pdf

Judgment text

[2008] 1S. C. R. 1021 M/S. ANIS AHMAD AND SONS -Y· V. COMMISSIONER OF INCOME TAX (APPEALS), KANPUR & ANR. (Civil Appeal No. 582 of 2008) JANUARY 22, 2008 (P. P. NAOLEKAR AND LOKESHWAR SINGH PANTA, JJ. ) T • Income Tax Act, 1961- s. 131-Assessment Year 1984- 85 - Assessee filing return as a Commission Agent - But Assessing Authority treated assessee as Trader and accordingly assessed taxable income - Matter went upto Appellate Tribunal which remanded the matter to Assessing Authority - On remand, Assessing Authority issued summons to ten traders under s. 131 (1) - Five traders appeared and gave evidence in favour of assessee - Other five traders residing ! , 9. The Revenue, feeling aggrieved, preferred an appeal before the Income Tax Appellate Tribunal. The Tribunal by its order dated 15. 01.

2004 allowed the appeal and held that the appellant-assessee has failed to produce any evidence that the transactions, in question, were not conducted by the appellant-assessee as 'Vyapari' but the transactions were conducted on commission basis. Being aggrieved against the said order, the appellant-assessee filed Income Tax Appeal before the High Court. The High Court, as noticed above, has concurred with the findings recorded by the Assessing Authority as confirmed by the Appellate Tribunal and dismissed the appeal in limine. Now, the appellant-assessee is before this Court. • 10. We have heard Mr. Subramanium Prasad, the learned counsel for the appellant-assessee and Shri T. S. Doabla, learned Senior Advocate for the respondents, and with their assistance examined the material on record.

The learned counsel for the appellant-assessee submitted that the High Court has committed grave error of fact and law in dismissing the appeal in limine without proper appreciation of the facts and legal proposition of law. According to him, for nonappearance of the traders summoned by the Assessing Authority, no fault could have been laid upon the appellantassessee and the Assessing Authority, the Appellate Tribunal as well as the High Court are not justified in drawing adverse inference against the appellant-assessee holding it to be 'Trader' in relation to the transactions conducted by the appellantassessee of the same goods in the same manner as was conducted with the traders whose evidence was accepted by the Assessing Authority. 11.

Per contra, the learned senior counsel appearing on behalf of the respondents has sought to support the order of the Assessing Authority which has been confirmed by the Appellate Tribunal as well as by the High Court, contending that this Court in exercise of its discretionary jurisdiction under Article 136 of the Constitution of India shall be slow in interfering the wellreasoned orders of the authorities and the High Court based upon the proper appreciation of the facts in issue and the law. 12. Having considered the respective contentions of the -'i learned counsel for the parties and having gone through the entire material on record, we are of the view that the impugned judgment and order of the High Court cannot be sustained. The record reveals that for the year 1983-84, the Assessing Authority had accepted the claim of the appellant-assessee dealing in the business of hides and skins as 'a Commission Agent'.

The appellant-assessee filed a chart of payments made to the "( purchasers by the traders through the appellant~assessee . acting as a Commission Agent. The five traders, who appeared before the Assessing Authority, have supported the claim of the appellant-assessee to be 'a Commission Agent' and not 'a Trader' and the Assessing Authority has accepted their evidence holding the appellant-assessee as a Commission Agent in respect of the transactions conducted with them by the traders. The appellant-assessee could not be held responsible for nonappearance of those five traders to whom the summons were j. issued by the Assessing Authority, as they are residing outside • the State of U. P. For non-appearance of those traders, no adverse inference ought to have been drawn by the authorities below and the appellant-assessee has led satisfactory evidence that its business is only that of the Commission Agent and not 'a Trader' dealing in the goods.

Now, the subject-matter of assessment for the year 1984-85 has been opened by the Revenue after a lapse of about 10-11 years holding the appellant-asseessee as Trader' in respect of dealers who are now living outside the State of U. P. The appellant-assessee could not be treated unequally between those traders who had appeared before the Assessing Authority and supported the claim of the appellant-assessee and on the contrary drawing adverse inference against the appellant-assessee for nonappearance of other five . traders to whom summons of the Assessing Authority could not be seNed. On this ground itself, .. :> .. the order of the Assessing Authority cannot be found reasonable, tenable and justified. As noticed above, the Assessing Authority for the assessment year 1983-84 had accepted the claim of the appellant-assessee having acted as Commission Agent in respect of the same articles which were brought by the sellers to the Arhatdaars in the Mandi for sale. -r- 13.

In this view of the matter, the Commissioner of Income Tax is right in holding the appellant-assessee as an 'Arhatiya' (Commission Agent) for the year 1984-85 and not as 'trader' as held by the Assessing Authority and accepted by the Income Tax Appellate Tribunal as well as by the High Cou11. 14. In the result, for the foregoing reasons, this appeal is '( allowed and the order of the High Court dated 01. 11. 2004 .. _ passed in l. T. A. No. 94/2004 upholding the order dated 15. 01. 2004 of the Income Tax Appellate Tribunal, Lucknow Bench, in ITA No. 1170/Alld/1997 for the Assessment Year 1984- )- 85 and the original order of the Income Tax Officer dated 29. 03. 1996 holding the appellant-assessee as 'Trader' and not 'Commission Agent' are quashed and set aside and as a result thereof, the order dated 09. 06. 1997 recorded by the Commissioner of Income Tax (Appeals) II Kanpur, in Appeal A No. CIT(A)ll/5/IT0. 2(7)/96-97/67 shall stand restored.

The • parties, however, are left to bear their own costs. B. B. B. Appeal allowed.