Commissioner Of Income Tax, Chandigarh-Ii v. Sh. Harbans Lal Sarna

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : I. T. A. No. 756 of 2008 (O&M)Date of Decision : December 23, 2008 Commissioner of Income Tax, Chandigarh-II....Appellant Vs.Sh. Harbans Lal Sarna....Respondent CORAM : HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE L. N. MITTAL * * * Present :Ms. Urvashi Dhugga, Standing Counselfor the Revenue. * * * ADARSH KUMAR GOEL, J. (Oral) : C.M. No. 23192-C-II of 2008 : Delay in re-filing the appeal is condoned. Main Appeal : 1.Revenue has preferred this appeal under Section 260A of theIncome Tax Act, 1961 against the order dated 28.02.2007 of the Income TaxAppellate Tribunal, Chandigarh Bench “B”, Chandigarh passed in ITANo.459/ Chandi/2005, for the Assessment Year 1998-99, proposing to raisefollowing substantial question of law :- “1.Whether on the facts andcircumstances of the case and in law, the Hon'bleI.T.A.T. was justified in holding that assessee haddischarged his onus of explaining genuineness ofthe sale of jewellery to M/s RKE, whereas the evidence gathered by the Department isotherwise ?” 2.The assessee claimed sale of jewellery as source of income,which was alleged to be un-disclosed income and found as a result ofsearch and seizure at the residence of Mr. Pardeep Kumar Gupta, Directorof M/s RKE. The Assessing Officer did not accept the explanation of theassessee. Same view was taken by the CIT (A), but the Tribunal held thatexplanation of the assessee was genuine. The Tribunal referred to its earlierorder dated 16.09.2005 in the case of Shri Anil Talwar. The Tribunal interalia recorded its finding as under :- “7.Another aspect of the matter is thefinding by the CIT (Appeals) that the onus was onthe assessee to have produced Mr. Pardeep KumarGupta, The Director of RKE in the course ofassessment proceedings. In our view, this findingis misplaced having regard to the entire conspectusof facts and circumstances of the impugned case.In the instant case, as we have noticed, theAssessing Officer issued summon u/s 131 to thesaid Mr. Pardeep Kumar Gupta and in response toit, none appeared. However, in response to thesummons, Mr. Pardeep Kumar Gupta submitted anaffidavit and other material confirming thetransaction of sale of jewellery by the assessee.Having received such material on record and alsothe fact that the assessment of the purchasercompany stood concluded without any adverseinference, the onus clearly shifted on to therevenue. Now, the onus was on the AO to lead evidence to demolish the case of the assessee. Noadequate and credible evidence has been broughton record by the Assessing Officer. The saidMr. Pardeep Kumar Gupta has been subjected to asearch operation by the revenue u/s 132(1) of theAct and the investigations have also been carriedout with respect to RKE and therefore, it wasentirely the responsibility of the revenue to havecarried out verification and culled out materialcontrary to the position canvassed by the assessee.There is no clinching material or evidence againstthe assessee. The confirmation from M/s RKE wasbefore the Assessing Officer. The said concern hasnot been found to be bogus or non-existent. InfactRKE is a company incorporated under theprovisions of the Companies Act, 1956 and is anexisting income tax payer on the records of therevenue. Its identity and existence, therefore,cannot washed away. Therefore, under suchcircumstances, the non appearance of Mr. PardeepKumar Gupta, Director of M/s RKE before theAssessing Officer cannot be held against theassessee as to draw adverse inference with respectto the impugned transaction. This is especially inthe light of the fact that the transactions with theassessee have been accepted by the Department inthe assessment proceedings of the purchasercompany, as noted by us in the earlier paragraphs.8.Another aspect which has a bearing on the case is that similar transaction of sale ofjewellery was noted by the revenue in the case ofShri Anil Talwar, Chandigarh. In the case of ShriAnil Talwar, the Tribunal in ITANo.621/Chandi/2002 vide order dated 16.09.2005has accepted the sale transaction as genuine. Thelearned counsel appearing before us hasvehemently contended that the factual matrix in theinstant case stands on similar footing to that in thecase of Shri Anil Talwar (supra). On this aspect,we find that even before the Assessing Officer, theassessee has submitted that similar transaction inthe case of Shri Anil Talwar was approved by theCIT (Appeals). Subsequently, the decision of CIT(A) has since been endorsed by the Tribunal in itsorder dated 16.09.2005 (supra). We have perusedthe said decision of the Tribunal and notice that thereasons weighing with the revenue to reject thesale transaction are similar to those taken by theAssessing Officer in the instant case. TheTribunal, after considering the entire material onrecord and the circumstances held that the sale ofjewellery stood explained. The Tribunal wassatisfied with the same set of evidence and materialwith respect to RKE that is presently before us.Thus, we are inclined to uphold the stand of the”assessee. 4.The finding of the Tribunal is a finding of fact based onappreciation of evidence and material on record. 5.We are unable to hold that any substantial question of lawarises. 6.The appeal is dismissed. (ADARSH KUMAR GOEL)JUDGE December 23, 2008monika ( L. N. MITTAL )JUDGE