Commissioner Of Income Tax (Central), Gurgaon v. Principal Officer, M/S Hill View Infrastructure (P) Ltd., Chandigarh

ITA No. 217 of 2015 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 217 of 2015 (O&M) Date of Decision: 13.8.2015 Commissioner of Income Tax (Central), Gurgaon ....Appellant. Versus Principal Officer, M/s Hill View Infrastructure (P) Ltd., Chandigarh ...Respondent. 1.Whether the Reporters of the local papers may be allowed to see the judgment?the judgment? 2.To be referred to the Reporters or not? 3.Whether the judgment should be reported in the Digest? CORAM:-HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.HON'BLE MR. JUSTICE RAMENDRA JAIN. PRESENT: Mr. Rajesh Sethi, Senior Standing Counsel with Mr. Arun Biriwal, Advocate and Mr. Arun Biriwal, Advocate and Ms. Pridhi Jaswinder Sandhu, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.Delay of 53 days in re-filing the appeal is condoned. 2.This appeal has been filed by the revenue under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 6.6.2014 (Annexure A-3) passed by the Income Tax AppellateTribunal, Chandigarh Bench 'B', Chandigarh (hereinafter referred to as“the Tribunal”) in ITA No. 549/Chd/2013 for the assessment year 2009-10, claiming the following substantial question of law:- Whether ITAT has erred in not appreciating that once the entries appearing on any seized document in thecourse of search are credible and shows thatoutstanding liability of the assessee amounting to` 1,28,89,362/- was in respect of an investment andby virtue of section 69 of the Act should have beentreated as income and could not have been restrictedto part payment? 3.Put short, the facts necessary for adjudication of the instantappeal as narrated therein may be noticed. A search operation underSection 132(1) of the Act was conducted at the premises of theassessee on 7.7.2009. The assessee filed its return of income underSection 153A of the Act on 22.11.2011 declaring nil income. TheAssessing Officer passed the assessment order dated 21.12.2011(Annexure A-1) by assessing the income at ` 1,71,18,360/-. TheAssessing Officer made addition of ` 1,28,68,362/- to the taxable incomeof the assessee under Section 69 of the Act besides other additions.Feeling aggrieved, the assessee filed an appeal before theCommissioner of Income Tax (Appeals) [for brevity “the CIT(A)”] whovide order dated 6.3.2013 (Annexure A-2) for the assessment years2007-08 to 2009-10 partly allowed the appeals and restricted theaddition made by the Assessing Officer to ` 59,43,115/- for theassessment year in question. However, the appeal relating to theassessment year 2010-11 was allowed. Being dissatisfied, the assesseeas well as the revenue filed appeals before the Tribunal. The Tribunalvide a consolidated order dated 6.6.2014 (Annexure A-3) dismissed theappeal of the assessee and the revenue for the assessment year 2009-10 on this issue. Hence, the present appeal by the revenue. 4.Learned counsel for the revenue submitted that on the basisof pages 59 to 67 of Annexure A-2 [before the CIT(A)] found and seizedfrom the premises of the assessee, it was established that the totalamount which was shown as outstanding in the books of account was` 1,28,89,362/- and the assessee had failed to satisfactorily explain thesource of the said amount. It was further submitted that the outstandingliability of the assessee amounting to ` 1,28,89,362/- was an investmentand the same had to be treated as income and could not have beenrestricted to part payment of ` 59,43,115/-. 4.Learned counsel for the revenue submitted that on the basisof pages 59 to 67 of Annexure A-2 [before the CIT(A)] found and seizedfrom the premises of the assessee, it was established that the totalamount which was shown as outstanding in the books of account was` 1,28,89,362/- and the assessee had failed to satisfactorily explain thesource of the said amount. It was further submitted that the outstandingliability of the assessee amounting to ` 1,28,89,362/- was an investmentand the same had to be treated as income and could not have beenrestricted to part payment of ` 59,43,115/-. 5.After hearing learned counsel for the revenue, we do notfind any merit in the appeal. The CIT(A) had partially accepted thecontention of the assessee and had deleted the amount of ` 59,43,115/-out of addition of ` 1,28,89,362/- made by the Assessing Officer on theground that the assessee had made the payment of ` 46,43,115/- inaddition to ` 13,00,000/- to Mr. Monga whereas the remaining amountwas still outstanding in the books of account of the assessee. Therelevant findings read thus:- “From the narrations above, it is crystal clear that thedocuments in dispute corroborate and are self-speaking, containing financial transactions of variousprojects. At page 14 of the impugned order, a tablehas been drawn which enumerates the total amountof transactions from the seized pages; Amount shownas credit/payment of Rs.46,43,115/- and outstandingtotaling Rs.1,28,69,362/- which is the same figure asper the letter dated 10.08.2008 (page 3) from Sh.Monga described as receivables and of which Rs.13,00,000/- was shown as already received. TheAO has added Rs.1,28,69,362/- which to my mind isnot correct as the same is an outstanding. At page 15,para (i) the amount of Rs.59,43,115/- [46,43,115 plus13,00,000] has been stated by AO as received by Sh.Monga. So in the absence of any reflection in thebooks being shown by the assessee, I hold thatRs.59,43,115/- is the amount to be added. Theaddition made by the AO is restricted accordingly.Consequently the assessee partly succeeds on thisground.” 6.The Tribunal while dismissing the appeal has recorded as under:- “37.We have heard the rival contentions andperused the record. The issues raised vide groundNo.1 in the appeal of the assessee and ground No.3in the appeal filed by the revenue is relatable to theseized documents found from the possession of theassessee during the course of search. The saiddocuments being page Nos. 59 to 67 of Annexure A-2are scanned and reproduced by the Assessing Officerat pages 3 to 11 of the assessment order. The page67 of A-2 is a letter written by one Shri Anil Monga toShri Lalit Jindal on 10.08.2008. The said letter talksof an account with approximate figures of the Mallbuilding price and rest of the figures in respect of theAshreya Studio Apartments, Hill View & M-1 Plaza. The letter further talks about advance lying with Mr.Lalit Jindal of ` 4,50,000/-. The person writing theletter has concluded by stating “Total receivable fromyou- ` 1,28,89,362/-, less already received from you –`13,00,000/- and balance due from you` 1,15,89,362/-.” To the said letter, Mr. Monga hasfurther attached annexures i.e. transaction lettermarked as (a) to (e) which incorporates theconclusion in respect of the different claims made inthe letter dated 10.08.2008. The said letter isscanned by the Assessing Officer and is reproducedat page 3 of the assessment order and the same isnot being reproduced for the sake of brevity. 38.XXXXXX The letter further talks about advance lying with Mr.Lalit Jindal of ` 4,50,000/-. The person writing theletter has concluded by stating “Total receivable fromyou- ` 1,28,89,362/-, less already received from you –`13,00,000/- and balance due from you` 1,15,89,362/-.” To the said letter, Mr. Monga hasfurther attached annexures i.e. transaction lettermarked as (a) to (e) which incorporates theconclusion in respect of the different claims made inthe letter dated 10.08.2008. The said letter isscanned by the Assessing Officer and is reproducedat page 3 of the assessment order and the same isnot being reproduced for the sake of brevity. 38.XXXXXX 39.Along with the said letter, five other pages wereattached and each page related to a differenttransaction between Mr. Monga and his familymembers with the assessee in respect of variousinvestments made by the family of Mr. Monga in theprojects floated by the assessee. The AssessingOfficer requisitioned the assessee to produce ShriMonga but he was never produced despite theassessee stating that he was prepared to producehim. However, during the course of assessmentproceedings, letter from Mr. Monga dated 21.11.2011was produced in which it is claimed that the figures inthe said letters were notional figures. Further, though the assessee claimed that the entries were reflectedin the books of account but the same were notproduced to the satisfaction of the Assessing Officer.The payments received from Mr. Monga or made toMr. Monga were not fully accounted for in the books ofaccount. The director Shri Lalit Jindal in his statementhad said that all the payments received from Mr.Monga were duly accounted for and some part of thepayment relating to M-1 Plaza property were notaccounted against which surrender to the tune of ` 2crores was claimed to have been made in the name ofM/s Mella Infracom. However, the assessee failed toco-relate the total entries. The perusal of the variousdocuments reflect the financial transactions in relationto various projects and in view of the covering letterwhich is very categorical in stating that the totalamount receivable from the assessee was` 1,28,89,362/- against which sum of ` 13 lacs wasalready received and the balance due from theassessee was ` 1,15,89,362/-. The presumption is tobe drawn against the assessee where the assesseehas failed to discharge the onus cast upon him.However, we are in conformity with the order ofCommissioner of Income Tax (Appeals) in restrictingthe addition to ` 59,43,115/-, as against addition of` 1,28,69,362/- made by the Assessing Officerbecause the said amount of ` 1,28,69,362/- depicts the amount receivable by Mr. Monga. The AssessingOfficer at page 14 has tabulated the total amount oftransaction page-wise and the amount shown ascredit/payment and the balance outstanding amount.The notings at page 66 reflect the total value ofinvestment at ` 79,60,250/- as against which therewas a credit of ` 33,01,375/- and the outstanding was` 46,48/875/-. At page 65, the transaction was of` 36,00,000/- against which there was a credit of` 1,43,000/- and balance was ` 34,57,000/-. Similarlyat page 64, the transaction was of ` 57,50,000/-against which there was a credit of ` 16,00,000/- andbalance was ` 41,50,000/-. At page 63, there was anadvance lying with the assessee of ` 4,50,000/- whichin no case can be added in the hands of theassessee. Further, the page 61 reflected cashpayments of ` 2,00,000/- and ` 8,00,000/- which werepaid by the assessee before us to the family membersof Shri Monga and as the same were not reflected inthe books of account, the said amounts are to betreated as income from undisclosed sources in thehands of the assessee. Another page was No.60, onwhich as against total amount of transaction,` 2,34,542/-, ` 1,98,740/- was paid and the balancewas ` 35,805/-. As per tabulated details at page 14,the amount credited/paid totalled to ` 46,43,115/- andthe balance on each page was shown as receivable by Mr. Monga and his family members from theassessee vide letter dated 10.08.2008. Further sumof ` 13,00,000/- is mentioned in the said letter placedat page 67 as having been received by him. In totalitythus the total payments made by the assessee wereof ` 46,43,115/- + ` 13,00,000/- and the addition is tobe restricted to ` 59,43,115/- as held by theCommissioner of Income Tax (Appeals). The balancebeing the amount payable by the assessee to ShriMonga and his family members is not includible asincome of the assessee. Accordingly, we uphold theaddition of ` 59,43,115/- in the hands of the assesseeand dismiss the grounds of appeal raised by both theassessee and the revenue in this regard.” 7.A perusal of the above shows that the CIT(A) restricted theaddition of ` 59,43,115/- as against the addition of ` 1,28,69,362/- madeby the Assessing Officer as the said amount depicted the paymentsactually made to Mr. Monga. The amount paid to Mr. Monga was to thetune to ` 46,43,115/- and the balance was shown as receivable by Mr.Monga and his family members from the assessee vide letter dated10.08.2008. A sum of ` 13,00,000/- as mentioned in the said letter wasalso received by him. In totality thus the total payments made by theassessee to Mr. Monga were of ` 46,43,115/- + ` 13,00,000/- and theaddition had been restricted to ` 59,43,115/-. The Assessing Officer haderred in making addition of ` 1,28,69,362/- to the income of theassessee. The balance amount payable by the assessee to Shri Mongaand his family members which was shown in the books of account of the ITA No. 217 of 2015 -9- assessee as outstanding could not be termed as undisclosed incomeand included in the total income of the assessee. The CIT(A) and theTribunal were right in sustaining the addition of ` 59,43,115/- in thehands of the assessee for the assessment year 2009-10. 8.In view of the concurrent finding of fact recorded by the CIT(A) and the Tribunal, no substantial question of law arises in this appeal.Accordingly, the instant appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE August 13, 2015 gbs (RAMENDRA JAIN) JUDGE