TaxTMI 
TaxTMI 
2022 (10) TMI 405
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the case, the Tribunal is justified in law in setting aside the disallowance of Rs.5,89,49,503/- claimed as Transport Creditors by following decisions in cases of CIT V/s Usha Stud Agricultural Farms (301 ITR page 384) and CIT V/s Prameshwar Bohra decided by Rajasthan High Court though credit worthiness of the transport creditors was not established by the assessee and not appreciating that the assessee had not provided even the identity of the Transport Creditors in the absence of which the assessing authority was not in a position to conduct further enquiries"? Subsequently, vide memo dated 22.03.2019, it had proposed the following "Redrafted Substantial Question of Law": "Whether in the facts and circumstances of the case, the Tribunal is justified in setting aside the addition made by the assessing authority towards the unsubstantiated transport creditors by holding that these pertain to earlier years accepted by the assessing authority as genuine, which is incorrect and as such order of the Tribunal perverse?" A Co-ordinate Bench of this Court vide order dated 22.03.2019 admitted the appeal on the redrafted substantial question of law. 3. After service of notice, the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ot have made the ad hoc disallowance; the fact that for the Assessment Year 2008 - 09 some addition was made under the said head, cannot be the sole basis for making such an addition for the subsequent Assessment Year, each assessment being an independent compact. He also pleaded about CBI raid & seizure of all documents, not even a piece of paper being in his custody or power. (d) The ITAT substantially upheld the version of Assessee and granted relief by setting aside the addition made by the AO. Aggrieved thereby, the Revenue has preferred this appeal under the provisions of the 260A of the 1961 Act with the substantial questions of law hereinabove mentioned. III. Having heard the learned counsel for the parties and having perused the appeal paper-book, we decline indulgence in the matter for the following reasons: A. THE RIGHT OF APPEAL U/S 260A; ITS SCOPE & CONTENT: (i) The Kerala High Court in CIT vs. WOONDUR JUPITAR CHITS (P) LIMITED 213 ITR 73 had pointed out that the provisions of 1961 Act providing for reference on a question of law arising out of an order of the Tribunal were 'Archaic' and therefore there was an eminent need for rationalisation of the same. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....er way insofar as the rights of the parties are concerned. (iii) It is profitable to see what Kanga & Palkhivala's 'Law and Practice of Income Tax', Vol. II, Eleventh Edn., Lexis Nexus at pages 3316 - 17 states: "...A question is a substantial question of law if: (i) it directly or indirectly affects substantial rights of the parties; or (ii) it is of general importance; (iii) it is an open question in the sense that the issue has not been settled by a pronouncement of the Supreme Court; (iv) it is not free from difficulty; or (v) it calls for a discussion for alternative view... The findings are based on no evidence; (vii) relevant admissible evidence has not been taken into consideration; (viii) inadmissible evidence has been taken into consideration; (ix) legal principles have not been applied in appreciating the evidence; or (x) the evidence has been misread..." These tests are stated to be illustrative and in no way exhaustive of the powers of the High Court to entertain an appeal, if there is other substantive ground of law. It hardly needs to be stated that a provision for appeal should be liberally construed and read in a reasonable & practical manner. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xt of this sub section shows its building blocks such as: 'expenditure', 'wholly and exclusively' and 'incurred for the business'. The burden of proving that the expenditure is incurred 'wholly and exclusively for the purpose of business is on the Assessee' vide JASWANT vs. CIT 212 ITR 24. The question whether an item of expenditure was wholly and exclusively laid out for the purpose of Assessee's business has to be decided on the basis of evidentiary material that prima facie establishes these 'building blocks'. (iv) The question on which the appeal is admitted involves, in the first place, the ascertainment of facts as to the business expenditure in question, and in the second, the application of the correct principle of law to the fact so ascertained. Therefore, essentially such a question is only a mixed question of fact & law as observed by the Apex Court in COMMISSIONER OF INCOME TAX vs. GREAVES COTTON 68 ITR 200. Therefore, we are not sure if the Revenue could maintain this appeal on the subject question. Added, there is a certain difference between an ordinary question of law on the one hand and a mixed question of fact & law, on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ad of a foreign country who otherwise enjoys diplomatic immunity under the Diplomatic Relations (Vienna Convention) Act, 1962. Exercising the powers of a Civil Court under the provisions of O. XIII of CPC, the AO can send for the books of accounts & documents that are seized (by a Magistrate) in other proceedings vide UNION OF INDIA vs. STATE 42 ITR 753. Courts have held that this power is coupled with a public duty, to call for the Assessee's books of accounts which are in the custody of a public authority vide EMC vs. INCOME TAX OFFICER 49 ITR 650. There is absolutely no explanation as to why the AO did not choose to invoke this provision in the fitness of things. Nothing prevented him from summoning the books of accounts/documents or at least copies thereof from the custody of CBI. The AO having not done his duty, could not have recorded a finding that the claim of Assessee as to transport expenditure was not substantiated. (iii) There is yet another aspect, which merits a bit deliberation. The books of accounts & documents being in the exclusive custody of the CBI Police, the Assessee except pleading this could not have done anything beyond. Arguably, in a sense, the case ....