UNION OF INDIA Vs. BALJIT SINGH SONDHI

JUDGEMENT

(1.) The respondent herein is working as Commissioner of Income Tax (Appeals) in the Income Tax Department, Central Board of Direct Taxes, Ministry of Finance, Government of India. In discharge of his quasi-judicial service, he had decided the proceedings filed by one Shri Subhash Singh, proprietor of M/s Mogra Service Station under Section 264 of the Income Tax Act (hereinafter referred to as "the Act") in respect of Assessment Year 2002-03. That petition was filed by Shri Subhash Singh, the assessee. The assessee had questioned addition of Rs. 4,37,070/- on account of alleged inflation of purchases made by the Income Tax Officer. As per the Income Tax Officer, the assessee had shown the purchase of diesel at Rs. 6,12,52,775/- in the Profit and Loss account, but in the ledger account, the figure of purchase was shown at Rs. 6,08,15,705/-. The difference between two figures was Rs. 4,37,070/-, which was treated as inflation of purchase by the ITO. The plea of the assessee while challenging this addition in his petition under Section 264 of the Act was that the assessee was running a petrol pump and while the stock was delivered by the oil companies free of charge, the assessee had to incur expenditure by way of payments to the drivers and khalasis for food etc. for the sake of ensuring proper quantity and quality of the goods. The explanation of the assessee was that Rs. 4,37,070/- was incurred on that account which was debited under the head "trip expenses". He also explained that though a separate account was maintained in the books of accounts in respect of this expenditure, during the year under consideration these expenses were merged with the figure of purchase of High Speed Diesel and that was a reason for difference of amount. He also submitted that the matter was reconciled before the ITO, but may have escaped his attention as the assessment was completed at the fag end of the year.

(2.) The respondent, before deciding the said petition, called for the comments of the ITO and the ITO submitted his report. Thereafter, order dated 30.8.2005 was passed by him allowing the said petition and accepting the plea of the assessee that it was not a case of showing inflated figure of purchase, but expenses incurred for payment to drivers and khalasis were, in fact, shown in "trip expenses" and duly accounted for. Therefore, the addition made by the ITO was not sustainable.

(3.) This was clearly a quasi-judicial order passed on the petition filed on 15.5.2005 and decided on 30.8.2005 after inviting the report of the ITO as mentioned above. It seems that thereafter a complaint dated 21.3.2008 was made on the same ITO who had passed the assessment orders against the respondent in the said complaint, the I.T.O. alleged that the respondent had changed the comments in his review report in the ACR which was earlier rated as "excellent". The ITO also referred to the aforesaid case and alleged that the respondent had shown undue favour to Subhash Singh while deciding the petition under Section 264 of the Act on receipt of the complaint. It is the version of the petitioner/employer that on receipt of the complaint, the matter was investigated. It was revealed during the course of investigation that the respondent had allowed unauthorized relief to the said assessee thereby conferring undue favour to it and causing loss to the Government"s revenue. Show cause notice was issued to the respondent. The respondent submitted his response/reply to the said charge-sheet. He contended that the petition was decided after proper verification of the facts and not in undue haste as alleged in the complaint and that it was decided with due care. Even on merits, he justified the passing of the orders dated 30.8.2005 while accepting the petition of Subhash Singh under Section 264 of the Act, inter alia, submitted as under: