LexM/S. ANIS AHMAD AND SONS versus COMMISSIONER OF INCOME TAX (APPEALS), KANPUR & ANR
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[2008] 1S.C.R.1021 A M/S. ANIS AHMAD AND SONS -Y· V. COMMISSIONER OF INCOME TAX (APPEALS), KANPUR & ANR. (Civil Appeal No. 582 of 2008) B JANUARY 22, 2008 (P.P. NAOLEKAR AND LOKESHWAR SINGH PANTA, JJ.) T • Income Tax Act, 1961- s.131-Assessment Year 1984- c 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 D to ten traders under s. 131 ( 1) - Five traders appeared and gave evidence in favour of assessee - Other five traders residing !<. outside the State did not appear as they could not be served • with the summons, for which, Assessing Authority drew adverse inference against the assessee and passed order treating it E to be a Trader- Correctness of - Held: Not correct-Assessee cannot be held responsible for non-appearance of the five traders residing outside the State - It led satisfactory evidence that its business is only that of the Commission Agent and not that of a Trader - Moreover, for earlier assessment year, F Assessing Authority had accepted assessee as Commission t. Agent. Assessee-appellant filed income tax return for the Assessment year 1984-85 as a Commission Agent for Traders of raw hides and skins. The Assessing Authority, G however, treated assessee as a 'Trader' and accordingly assessed its taxable income. The matter went upto the t· Appellate Tribunal, which remanded the matter back to ,.. the Assessing Authority. On remand, the Assessing Authority issued summons to ten traders under section H 1021 MIS. ANIS AHMAD & SONS v. COMMNR. OF INCOME 1022 TAX (APPEALS), KANPUR & ANR. 131 (1) of the Income Tax Act, 1961. Five traders appeared A ~y and gave evidence in favour of the assessee, but the other five traders, who were residing outside the State, did not appear as they could not be served with the summons. The Assessing Authority drew adverse inference against the assessee by treating its transactions with the absentee B traders as having been done by the assessee in the capacity of a Trader and not as a Commission Agent. 'f Assessee filed appeal which was allowed by the ~ Commissioner of Income Tax (Appeals). The Appellate Tribunal, however, upheld the decision of the Assessing c Authority. High Court concurred with the findings recorded by the Assessing Authority as confirmed by the Appellate Tribunal and dismissed the appeal in limine. In appeal to this Court, the contention of the assessee is that for non appearance of the traders 0 summoned by the Assessing Authority, no fault could } .. have been laid upon the assessee and the Assessing .. Authority, the Appellate Tribunal as well as the High Court was not justified in drawing adverse inference against the assessee holding it to be a 'Trader'. E Allowing the appeal and restoring the order passed by the CIT(Appeals), the Court HELD: 1.1. For the year 1983-84, the Assessing Authority had accepted the claim of the assessee- F A appellant dealing in the business of hides and skins as 'a Commission Agent'. The assessee filed a chart of payments made to the purchasers by the traders through the assessee acting as a Commission Agent. The five traders, who appeared before the Assessing Authority, supported the claim of the assessee to be 'a Commission G -- --+ Agent' and not 'a Trader' and the Assessing Authority ...... accepted their evidence holding the assessee as a Commission Agent in respect of the transactions conducted with them by the traders. The assessee could not be held responsible for non-apperance of those five H 1023 SUPREME COURT REPORTS [2008] 1 S.C.R. A traders to whom the summons were 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 assessee has led satisfactory evidence that B its business is only that of the Commission Agent and not 'a Trader' dealing in the goods. [Para 12] [1028-A, B, C, D, E] 1.2. The subject-matter of assessment for the year 1984-85 was opened by the Revenue after a lapse of about C 10-11 years holding the assessee as 'Trader' in respect of dealers living outside the State. The assessee could not be treated unequally between
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