TaxTMI 
TaxTMI 
1982 (4) TMI 121
X X X X Extracts X X X X
X X X X Extracts X X X X
....Puran . . Chand 5 annas 8 annas 3. Shri Niranjan Kumar . . minor son of Shri . . Nand Lal 6 annas — Shri Nand Lal, who is a partner in the assessee firm acts as Manager of the sister concern because of the close relationship of the partners involved therein. However, it is accepted by the revenue that both the firms are genuinely constituted and have been granted registration for this under appeal. Shri Nand Lal is paid salary by M/s. Niranjan Trading Company and this salary is determined at 10 per cent of the net profit income as per profit and loss account before deduction of his salary and this has been allowed in the assessment year under appeal in computing the income of that concern as stated by Shri D. S. Gupta, the ld. counsel for the assessee, at the Bar. The business of the sister concern is that of purchase and sale of cotton only. It is also a common ground that there have been commercial transactions between the assessee-firm and the sister concern in the earlier years and these have been accepted as genuine. 4. The assessee firm sold 200 bales of cotton to its sister concern M/s. Niranjan Trading co., Kotkapura on the following dates: S. No. Num....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment dt. 11th Dec., 1967 entered into between Smt. Shanti Devi on behalf of the firm and Shri Nand Lal, a copy of which had been furnished and placed on the file of the ITO, to this effect. The ITO came to the conclusion that, "in a clandestine move, the assessee has diverted its own profits to the allied concern M/s Niranjan Trading Co., Kotkapura on the sales of 200 bales of cotton and thereby made an attempt to mitigate its tax liability". He, therefore, brought the said profit of Rs. 40,728 into the total income of the assessee for purpose of tax. The total income of the assessee was determined by the impugned order dt. 26th March, 1977 at Rs.1,44,668 before deduction of firm's tax amounting to Rs. 22,484. The divisible income was Rs. 1,22,184. 6. This assessment also included a sum of Rs. 8,753 added by the ITO on account of loss in cotton 320Faccount which had been treated as speculation loss as held in the original assessment order dt. 12th Feb., 1974 passed in this case because the present impugned order dt. 26th March, 1977 is in fact in pursuance of the directions of the AAC issued in appeal. 7. When the impugned assessment was taken up in appeal before the Commission....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e ld. Counsel for the assessee submitted that the assessee was following financial year as the previous year. However, M/s. Niranjan Trading Co. was having year ending 31st July as the previous year. Therefore, the transactions out of which the profit of Rs. 40,728 accrued to M/s. Niranjan Trading Co. Kotkapura, fell for consideration in the asst. yr. 1972-73. The assessment for the year 1972-73 in the case of M/s. Niranjan Trading Co. was completed on 13th Jan., 1975 and has become final. He contended that in the case of the assessee, denovo assessment had been made on 26th March 1977 and when this sum of Rs. 40.728 was clubbed into the total income of the assessee, it tentamounted to deliberate double assessment of the same income which is prohibited in law. It was submitted by him that the assessment in the case of M/s. Niranjan Trading Co. made for the asst. yr. 1972-73 on 13th Jan 1975, has become final by efflux of time, and, therefore the same cannot be disturbed at this stage. Hence the tax of the same amount in the hands of the assessee for the year under appeal is contrary to law. 0. The ld. counsel for the assessee made a pertinent point that though the authorities bel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at what is recorded in the books of account of the assessee and that of its sister concern, is so sacrosanct that is must be accepted as it is. 14. Refuting the charge of the ld. counsel for the assessee that the revenue is attempting double taxation of the same income, it was argued by the ld. Deptl. Rep. That it is open to the assessee to seek such remedies as may be open in law and, therefore, the main argument that a particular amount at a particular point of time is doubly taxed, cannot per se serve a basis of deleting the addition make in the case of the assessee. Therefore, the addition was rightly made and sustained. 15. Both the sides argued that in so far as the other grounds of appeal of the assessee relating to the loss of Rs. 8,753 was concerned, it is out of a single speculative transaction and, therefore, the arguments from both the sides may be taken as the same as in the case of M/s. Kewal Krishan Sat Pal, Moga, ITA No. 650/81 decided on 25th March, 1982. 16. After careful consideration of the rival submissions, we are of the opinion that the appeal of the assessee has to be fully allowed. Before we go to the ground relating to the addition of Rs. 40,728 w4e ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is so well settled that no authority is necessary in its support. The ITO when he examined Shri Bhagat Ram, who is the manager of Patel Volkart Ltd., Kotkapura on 14th Dec., 1976, stated in clear cut terms that "goods were delivered to us on 4th Feb 1971 by the M/s. Niranjan Trading Co. through Shri Puran Chand S/o Shri Nand Lal. These goods were lying in the compound of M/s. Patel Volkart Ltd. I did not give any delivery note in respect thereof although on 4th Feb., 1971 itself despatched 50 bales of cotton through truck No. PNV 3921 to Alwar and 50 bales of Delhi Cloth Mills in Truck No. PZP 899 engaged through Truck Union, Kotkapura". This shows the nature of transaction and the fact factually delivery took place. At page 64 onwards is the statement of Shri Karam Chand who is the Munim of M/s. Niamat Rai Kundan Lal Ahuja & Co., Bhatinda. This statement of his was recorded by the ITO in Urdu. In this statement, Shri Karam Chand has stated that the name of M/s. Niranjan Trading Co. was written on the information of dalal. The old name of the firm was M/s. Udmi Ram Babu Ram and for that reason they wrote the same name Shri Chhagan Lal, dalal of Kotkapura, arranged this transaction....