Commissioner Of Income Tax (Central), Kanpur v. Surjit Singh & Sons (Huf

IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 17 of 2013 Commissioner of Income Tax (Central), Kanpur ………….. Appellant Versus Surjit Singh & Sons (HUF) .…………. Respondent { {{{ Present: Mr. Hari Mohan Bhatia, Advocate for the appellant. Mr. Rishabh Kapoor, Advocate for the respondent. Coram: Hon’ble Barin Ghosh, C.J.Hon’ble Servesh Kumar Gupta, J. BARIN GHOSH, C.J. (Oral) (Delay Condonation Application No.8182 of 2013) There has been 34 days’ delay in preferring the appeal. The appeal was originally preferred before the Hon’ble Allahabad High Court within time. The same was not entertained by the Hon’ble Allahabad High Court on the ground of territorial jurisdiction. Accordingly, the present appeal has been preferred. The learned counsel appearing on behalf of the respondent does not want to object the application for condonation of delay. For the reasons as above and also being satisfied with the reasons furnished, we allow the application for condonation of delay. (Application for Exemption No.8188 of 2013) Having had filed the appeal with a certified copy of the order before the Hon’ble Allahabad High Court, appellant had filed an application seeking exemption of filing a certified copy of the order appealed against. Today, a certified copy of the order has been produced in Court, which is kept with the record. Accordingly, the application has lost its necessity. (Income Tax Appeal No. 17 of 2013) The Assessing Officer increased the total income by `33,60,000/- as unexplained income. That was assailed before the Appellate Authority by the assessee. The Appellate Authority noted the assertions of the assessee to the effect as follows :- “(i) The receipt of business had been deposited in the bank account; bank account; (ii)the other entries in the bank account represented fund flow on capital account, i.e. re-deposit of cash withdrawn earlier or cash received otherwise on capital account; and flow on capital account, i.e. re-deposit of cash withdrawn earlier or cash received otherwise on capital account; and (iii)since its turnover was below `40 lakh and it had shown net profit exceeding 8%, it was eligible for computation of its income under Section 44AD of the Income Tax Act and was not required to maintain regular books of account.” shown net profit exceeding 8%, it was eligible for computation of its income under Section 44AD of the Income Tax Act and was not required to maintain regular books of account.” 2. The Appellate Authority, after having had considered those submissions, observed as follows :- “(i) Unless the A.O. is able to show that the cash withdrawn by the assessee from its bank account or received by it from any other verifiable source was spent by it elsewhere, the assessee’s contention that it was available with it as cash at hand cannot be rejected; withdrawn by the assessee from its bank account or received by it from any other verifiable source was spent by it elsewhere, the assessee’s contention that it was available with it as cash at hand cannot be rejected; (ii)the assessee’s contention that considering its turnover, it was entitled to presumptive determination of its income under Section 44AD and 44AE of the I.T. Act has not been controverted or found as false by the A.O. Therefore no adverse inference should be drawn if the assessee did not maintain regular books of account; turnover, it was entitled to presumptive determination of its income under Section 44AD and 44AE of the I.T. Act has not been controverted or found as false by the A.O. Therefore no adverse inference should be drawn if the assessee did not maintain regular books of account; (iii)in such cases, accretion to assets in course of the previous year is a good quide to estimate the assessee’s income; previous year is a good quide to estimate the assessee’s income; (ii)the assessee’s contention that considering its turnover, it was entitled to presumptive determination of its income under Section 44AD and 44AE of the I.T. Act has not been controverted or found as false by the A.O. Therefore no adverse inference should be drawn if the assessee did not maintain regular books of account; turnover, it was entitled to presumptive determination of its income under Section 44AD and 44AE of the I.T. Act has not been controverted or found as false by the A.O. Therefore no adverse inference should be drawn if the assessee did not maintain regular books of account; (iii)in such cases, accretion to assets in course of the previous year is a good quide to estimate the assessee’s income; previous year is a good quide to estimate the assessee’s income; (iv)the assessee has furnished its statement of affairs as on 31.03.2008 as well as 31.03.2009, showing that the accretion to its capital account and assets during the previous year was explainable with reference to the income shown by it in the return of income; on 31.03.2008 as well as 31.03.2009, showing that the accretion to its capital account and assets during the previous year was explainable with reference to the income shown by it in the return of income; (v)this suggests prima faciethat the A.O’s allegation of the cash deposit in the bank accounts and the firm being unexplained is not sustainable; the cash deposit in the bank accounts and the firm being unexplained is not sustainable; (vi)nevertheless, in order to satisfy himself, he may examine the details submitted by the assessee and cause such inquiry as he deems fit in this regard; and examine the details submitted by the assessee and cause such inquiry as he deems fit in this regard; and (vii) if he is able to reach any positive finding about cash withdrawn from the bank going elsewhere or for any other reason, the cash available on a particular date being less than the cash deposited in the account on that day, he will be entitled to hold such deposit as unexplained and addition to that extent will be sustained.” withdrawn from the bank going elsewhere or for any other reason, the cash available on a particular date being less than the cash deposited in the account on that day, he will be entitled to hold such deposit as unexplained and addition to that extent will be sustained.” 3. After having had made the above observations, the Appellate Authority provided in the appellate order as follows :- “With this end in view, the assessee is directed to produce its cash statement and explain the availability of cash as the source of the deposit in question. The AO is entitled to cause such inquiry as he thinks fit to verify the correctness of the same. He would be entitled to hold a cash deposit or part thereof as unexplained if he is able to establish that: (i)the cash shown as received by the assessee had no explained source, or explained source, or (ii)the cash withdrawn from bank or received by the assessee from any other verifiable source which is claimed to be available as a source of subsequent cash deposit was actually spent by the assessee and was not available for the deposit, or assessee from any other verifiable source which is claimed to be available as a source of subsequent cash deposit was actually spent by the assessee and was not available for the deposit, or (iii)the cash applied (by way of impugned deposit or otherwise) on any occasion exceeded the cash available on that date. otherwise) on any occasion exceeded the cash available on that date. (i)the cash shown as received by the assessee had no explained source, or explained source, or (ii)the cash withdrawn from bank or received by the assessee from any other verifiable source which is claimed to be available as a source of subsequent cash deposit was actually spent by the assessee and was not available for the deposit, or assessee from any other verifiable source which is claimed to be available as a source of subsequent cash deposit was actually spent by the assessee and was not available for the deposit, or (iii)the cash applied (by way of impugned deposit or otherwise) on any occasion exceeded the cash available on that date. otherwise) on any occasion exceeded the cash available on that date. It is clarified that the finding is based on the premise that, considering its turnover, the assessee was entitled to presumptive determination of its income. If, in course of examination, the AO is able to give a positive finding that the assessee’s turnover exceeded what is claimed by it or that the assessee has capitalized profit in excess of what has been offered to tax by it, he will be entitled to deny the benefit of presumptive determination of income and/or assess the excess income thus capitalized by it.” 4. Therefore, a reading of the order of the Appellate Authority would make it clear that it remitted the matter to the Assessing Officer in relation to increase of total income by `33,60,000/-. Before the Tribunal, revenue contended that, having regard to the provisions contained in Section 251 of the Income Tax Act, 1961, the Appellate Authority had no jurisdiction to remand the matter pertaining to the increase of the total income. The Tribunal, despite considering the order of the Appellate Authority, felt that the Appellate Authority has struck down the addition or increase, while the Appellate Authority did not do so. There is a manifest error, therefore, on the face of the order of the Tribunal. We hold and declare that the appellate order made it clear that the Appellate Authority is remanding the matter to the Assessing Officer pertaining to the addition/increase of the total income to the extent mentioned above and, thus, the finding of the Tribunal to the effect that the Appellate Authority struck down the said addition or increase is an erroneous finding. The order of the Tribunal is, accordingly, set aside. The matter is remitted back to the Tribunal for the purpose of determination, whether, in view of the provisions contained in Section 251 of the Income Tax Act, 1961, the Appellate Authority had the power of remanding the matter for reassessment of the increase/addition, as was appealed against the order of the Assessing Officer? ( Servesh Kumar Gupta, J.) (Barin Ghosh, C.J.) 25.10.2013 25.10.2013 P. Singh