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income-tax Officer Vs. Luxmi Rice Mills - Court Judgment

LegalCrystal Citation
CourtIncome Tax Appellate Tribunal ITAT Chandigarh
Decided On
Judge
Reported in(1983)6ITD107(Chd.)
Appellantincome-tax Officer
RespondentLuxmi Rice Mills
Excerpt:
.....income-tax act, 1961 ('the act'). the firm actually consists of six partners, one of whom is smt. sarla singal.4. on receipt of the above documents, the ito compared the signatures of smt. sarla singal as given in form no. 12 supra, and as given in the instrument of partnership filed with him. he, thereafter, came to the conclusion that the two signatures were not that of smt. sarla singal.he, therefore, called her and examined her on 4-11-1978. according to him, this statement indicated that she did not put up her signatures on form no. 12.5. the ito forwarded form no. 12 and the partnership deed along with subsequent signatures of smt. sarla singal to the government examiner of questioned documents at simla. this expert opined that the signatures appearing in form no. 12 were not.....
Judgment:
1. This appeal by the revenue is directed against the order of the Commissioner (Appeals), dated 26-5-1981, relating to the assessment year 1978-79.

2. The issue before us as brought by the revenue is whether, on the facts and in the circumstances of the case, the learned Commissioner (Appeals) erred in directing the ITO to allow registration to the appellant firm. For determination of this issue, the facts that we have to take into consideration are as under : 3. The assessce is a registered firm working under the name and style of Luxrni Rice Mills, Pehowa. It had been assessed as a registered firm for the assessment year prior to the assessment year under appeal.

Therefore, on 10-7-1978, when the return of income was filed by the assessee, the assessee also enclosed Form No. 12 for continuation of registration in terms of Section184(7) of the Income-tax Act, 1961 ('the Act'). The firm actually consists of six partners, one of whom is Smt. Sarla Singal.

4. On receipt of the above documents, the ITO compared the signatures of Smt. Sarla Singal as given in Form No. 12 supra, and as given in the instrument of partnership filed with him. He, thereafter, came to the conclusion that the two signatures were not that of Smt. Sarla Singal.

He, therefore, called her and examined her on 4-11-1978. According to him, this statement indicated that she did not put up her signatures on Form No. 12.

5. The ITO forwarded Form No. 12 and the partnership deed along with subsequent signatures of Smt. Sarla Singal to the Government Examiner of Questioned Documents at Simla. This expert opined that the signatures appearing in Form No. 12 were not written by Smt. Sarla Singal. The assessee when given an opportunity to explain this produced the opinion of an expert Shri A.N. Jha on questioned documents which supported the claim of the assessee. However, the ITO relying upon her statement made on 4-11-1978 came to the conclusion that she had not personally signed Form No. 12 submitted to him on 10-7-1978 and as such he could not have allowed continuation of registration.

6. Taking into consideration the above developments, the ITO, in view of the provisions of Section 144A of the Act, referred the matter to the IAC. The IAC, after perusal of the evidence relating to questioned signatures opined that the effect of this is only that the matter should be decided not on the basis of the opinions of the experts but on other relevant materials. In view of these instructions, the ITO reverted back to the statement of Smi. Sarla Singal recorded on 4-11-1978 and holding that according to her statement she had admitted that signatures placed on Form No. 12 filed on 12-7-1978 were not hers, held that form submitted could not be considered for granting continuation of registration to the assessee-firm under Section 184(7).

He, accordingly, refused to allow continuation of registration to the firm for the year under appeal.

7. When the matter was taken up in appeal before the learned Commissioner (Appeals), he went to this aspect of the matter in detail and examined personally experts of both the sides. After doing so, he came to the conclusion that the opinion of the expert produced by the assessee was not reliable. However, in view of the ratio decidendi of the Supreme Court judgment in the case of Magan Bihari Lal v. State of Punjab AIR 1977 SC 1091, he held that it would be extremely hazardous to condemn the assessee on the opinion of experts alone. He, therefore, directed the ITO to allow continuation of registration. Hence, the grievance of the revenue.

8. We have heard both the sides and considered the entire evidence on record. We are of the considered opinion that there is no case made out by the revenue for an interference in the order of the Commissioner (Appeals). However, in supporting the order of the Commissioner (Appeals) we are not endorsing the observations made by him in his impugned order but only the decision arrived at. The issue that is before us had also come up earlier in the case of Munshi Ram Ram Kishan [IT Appeal Nos. 328 and 682 of 1980 decided on 30-8-1982]. In this judgment we have held that the whole exercise of reference to the Government Examiner of QuestionediDocuments and the assessee's production of his own expert has led only to the conclusion that both of them did not agree on anything. There is at best a contradiction of the decision by each of them supporting the party which made a reference for purpose of examination of the question documents. In the case before us, we find that there is not only a difference of opinion between the two experts but the conclusions drawn by the ITO on the basis of the statement of Smt. Sarla Singal on 4-11-1978 are not warranted by the facts of the case. Smt. Sarla Singal, wife of Shri Raj Kumar, was again examined on 7-8-1979 when she clarified that when her statement was recorded on 4-11-1978, she had told the ITO that those were her signatures. However, when the ITO went on asking her again and again she got confused and stated what was recorded in her statement on 4-11-1978 and which was adversely interpreted by the ITO. She, however, clarified that even on that date she accepted the signatures in Form No. 12 for the assessment years 1977-78 and 1978-79 as her own. When the ITO wanted to know how there was such a wide variation between the two signatures, she explained to him that one of the signatures on Form No. 12 was signed by her casually while she was sitting with a baby in her arms, hence the difference in signatures. Thus, we find on facts that there is nothing conclusively proved against the signatures of Smt. S. Sarla in Form No. 12 so as to make the entire form non est in law. Therefore, the reliance of the revenue on the judgment of the Allahabad High Court in the case of Matreja & Co. v. CIT [1977] 106 ITR 378 does not carry it any further.

9. On the other hand, the Hon'ble Allahabad High Court in a later judgment in the case of Brij Rattan Lal Bhoop Kishore v. CIT [1982] 136 ITR 722 has held in a case where an application for registration was not personally signed by one of the partners of the firm that the ITO ought to have given an opportunity to the firm to rectify the defect in the application and registration could not be refused without giving such opportunity. Thus, we see that at worst it can be said that even in judicial pronouncements there is conflict of decisions.

10. On the above facts and circumstances of the case the observations of the Hon'ble Supreme Court in the case of Magan Bihari Lal {supra) assume greater importance. When we say so, we are aware that these observations were made by the Hon'ble Court in a criminal case.

However, the observations are very pertinent and are applicable to the issue before us. In this case, the Hon'ble Court observed that it is now well settled that expert opinion must always be received with great caution and perhaps none so with more caution than the opinion of a handwriting expert. In the case before us, the entire case has been built firstly by obtaining opinion of a handwriting expert and then by the ITO himself interpreting the statement of Smt. Sarla Singal in order to support his conclusions. The entirety of the facts of the case does not justify this action. We, therefore, support the order of the Commissioner (Appeals) and direct the ITO that he should allow continuation of registration to the assessee.

11. For the conclusions that we have arrived above, we fully rely upon our order made in the case of Munshi Ram Ram Kishan (supra). That judgment the Tribunal has been accepted by the revenue without filing even a reference application under Section 256(1) of the Act.


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