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2008 DIGILAW 1167 (PNJ)

Commissioner Of Income-tax v. Kailash Rice Mills

2008-07-03

RAKESH KUMAR GARG, SATISH KUMAR MITTAL

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Judgment Satish Kumar Mittal, J. 1. The Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as "the Tribunal") has referred the following substantial questions of law for the opinion of this court, which are arising out of I.T.A. No. 169 of 1981 in the case of the assessee for the assessment year 1979-80: 1. Whether the Tribunal was right in deleting the addition of Rs. 10,000 even when the assessee has unequivocally surrendered the amount to be taxed as its income? 2. Whether the Tribunal is right in deleting the addition of Rs. 10,000 from the income of the assessment year 1979-80 on the ground that this deposit did not fall in the previous year for this year? 2. In this case, the assessment year involved is 1979-80 for which the relevant previous year ended on March 31, 1979. The assessee is a partnership firm and was engaged in the business of manufacturing of rice. On May 9, 1978, the assessee had shown a cash credit of Rs. 10,000 in the name of Prithi Singh. During the course of the assessment proceedings, the Assessing Officer enquired about the genuineness of the said cash credit and asked the assessee to establish its genuineness. By that time, Prithi Singh had expired and the assessee came forward with an affidavit of Dharam Singh son of Prithi Singh in support of his contention. The Assessing Officer asked the assessee to produce Dharam Singh and to file the evidence of agricultural income and mutation of land, etc. In response to the said requirement, the assessee filed the revised return on July 17, 1980, and surrendered the said credit of Rs. 10,000 while making the statement that the said cash credit was advanced by Prithi Singh, who had since expired, and his son Dharam Singh felt hesitant to appear before the Assessing Officer, therefore, in order to put an end to litigation and to avoid multiplicity of the proceedings, the assessee surrendered the above credit subject to no penal action. The Assessing Officer did not accept the said offer and added the said cash credit of Rs. 10,000 being the assessees own unexplained income. 3. The appeal of the assessee was dismissed by the Assistant Commissioner and the order of the Assessing Officer was confirmed. The Assessing Officer did not accept the said offer and added the said cash credit of Rs. 10,000 being the assessees own unexplained income. 3. The appeal of the assessee was dismissed by the Assistant Commissioner and the order of the Assessing Officer was confirmed. On further appeal by the assessee to the Tribunal, the Tribunal allowed the appeal while observing that in view of the facts stated by the lower authorities, the cash credit was undoubtedly not genuine, but in its opinion it could not be subjected to tax for the assessment year under consideration as it does not fall in the "previous year" which started much after the said credit found place in the books before the business was set up. 4. Against the aforesaid order, the Department got referred the aforesaid two substantial questions of law for the opinion of this court. 5. We have heard counsel for the parties. 6. Learned Counsel for the assessee submitted that in this case the total tax effect is near about Rs. 2,500. This fact has not been disputed by counsel for the Revenue. In view of the said factual position as well as keeping in view the fact that this case pertains to the assessment year 1979-80, we are of the opinion that the questions referred by the Tribunal do not require consideration by this Court because the amount involved is too small. For taking this view, we can draw support from the judgment of this Court in CIT v. Shri K.L. Saluja, C/o Bharat Tractor, Charkhi Dadri (Income-tax Reference No. 36 of 1991, decided on February 21, 2005) wherein the question referred by the Tribunal was not considered by this Court because the amount involved was very small. This view is also supported from the judgment of the Full Bench of this Court in CIT v. Smt. Aruna Luthra, wherein it has been observed that "on a consideration of the matter, we find that the dispute relates to the assessment year 1987-88. The parties have been litigating for more than 13 years. The ultimate tax effect is limited. This view is also supported from the judgment of the Full Bench of this Court in CIT v. Smt. Aruna Luthra, wherein it has been observed that "on a consideration of the matter, we find that the dispute relates to the assessment year 1987-88. The parties have been litigating for more than 13 years. The ultimate tax effect is limited. Thus, even though the decision on the question of law is in favour of the Revenue, we are not inclined to interfere with the order passed by the Tribunal." The view taken by us is further supported from the judgment of the Delhi High Court in CIT v. Blaze Advertising (Delhi) P. Ltd. [2002] 255 ITR 460 in which the court declined to answer the question on the ground that the amount involved was only Rs. 18,823. In view of the above, we decline to answer the questions and accordingly dispose of the reference.