Commissioner Of Income Tax, Faridabad v. To Be Referred To The Reporters Or Not?

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A. No. 94 of 2010 Date of Decision: May 19, 2010 Commissioner of Income Tax, Faridabad …Appellant Versus Smt. Vimal Chawla Charitable Trust, Faridabad …Respondent CORAM:HON'BLE MR. JUSTICE M.M. KUMAR HON'BLE MR. JUSTICE JITENDRA CHAUHAN Present:Ms. Urvashi Dhugga, Advocate, for the appellant. 1.To be referred to the Reporters or not? 2.Whether the judgment should be reported inthe Digest? M.M. KUMAR, J. This is an appeal filed by the revenue under Section260A of the Income-tax Act, 1961 (for brevity, ‘the Act’),challenging order dated 17.7.2009, passed by the Income TaxAppellate Tribunal, Delhi Bench ‘I’, New Delhi (for brevity, ‘theTribunal’), in ITA No. 2841/Del/2008, in respect of assessment year2005-06. The Tribunal has upheld the view taken by the CIT(A) inhis order dated 26.6.2008. The revenue has thus challenged theconcurrent findings by urging that the following substantivequestions of law would arise for determination of this Court:- “(I)Whether, on the facts and in the circumstances ofthe case, the Ld. ITAT was right in law inupholding the order of the Ld. CIT(A) inentertaining the additional evidence as per Rule46A of Income Tax Rules even though despitenumerous opportunities provided to produce theevidence in support of its claim and inspite of this,the assessee had failed to do so? (II)Whether, on the facts and in the circumstances ofthe case, the Ld. ITAT was right in law inupholding the order of the Ld. CIT(A) in deletingthe addition of Rs. 5,55,751/- made by theAssessing Officer on account of unexplainedexpenditure u/s 69C of the Income Tax Act, 1961especially when the assessee had failed to explainthe reason in respect of difference shown byassessee and estimated by the Valuation Officer? (III)Whether, on the facts and in the circumstances ofthe case, the Ld. ITAT was right in law inupholding the order of the Ld. CIT(A) in deletingthe addition of Rs. 15,00,000/- made by theAssessing Officer on account of income fromundisclosed sources u/s 68 of the Income Tax Act,1961 especially when the assessee had failed todischarge the onus cast upon it to prove thegenuineness of the donors?” 2.All the aforementioned three questions were raisedbefore the Tribunal. In so far as question No. 2 relating to deletion ofRs. 5,55,751/- is concerned, the Tribunal has taken the view that theopinion of the CIT(A) was based on sound principle because thedifference between the two valuations is less than 10%. The Tribunalfollowed the earlier decisions of various other Benches including thedecision of the Chandigarh Bench in the cases of Amir Chand v.ACIT, 124 Taxman 162 (Chd); and ACIT v. Shivalic Loha Mills Pvt.Ltd., 123 Taxman 276 (Chd). It has been held in both the decisionsthat where the difference in the cost of construction estimated by theDVO and the one proffered by the assessee is less than 10% then sucha difference has to be ignored for the purpose of making addition tothe income of the assessee. The Tribunal has also referred thejudgment rendered in the case of Honest Group of Hotels (P) Ltd. V.CIT, 123 Taxman 464 (J&K); and ITO v. JMP Enterprises, 18 TLR277 (Amritsar). 3.At the hearing we asked Ms. Urvashi Dhugga, learnedcounsel for the revenue to apprise us about the status of the aforesaidjudgments of the Tribunal. It appears that the revenue has not filedany appeal against those judgments. Ms. Dhugga has not been able topoint out that the revenue has filed any appeal against the orderspassed by the Chandigarh Bench or Amritsar Bench. If the aforesaidorders have been accepted by the revenue then the principle ofconsistency would be applicable, as have been laid down by Hon’blethe Surpeme Court in the cases of Radhasoami Satsangv. CIT,[1992] 193 ITR 321 (SC); Berger Paints India Ltd. v. CIT, [2004] 3.At the hearing we asked Ms. Urvashi Dhugga, learnedcounsel for the revenue to apprise us about the status of the aforesaidjudgments of the Tribunal. It appears that the revenue has not filedany appeal against those judgments. Ms. Dhugga has not been able topoint out that the revenue has filed any appeal against the orderspassed by the Chandigarh Bench or Amritsar Bench. If the aforesaidorders have been accepted by the revenue then the principle ofconsistency would be applicable, as have been laid down by Hon’blethe Surpeme Court in the cases of Radhasoami Satsangv. CIT,[1992] 193 ITR 321 (SC); Berger Paints India Ltd. v. CIT, [2004] 266 ITR 99; CITv. J.K. Charitable Trust, (2009) I SCC 196; andC.K. Gangadharanv. CIT, (2008) 8 SCC 739. 4.As far as the question concerning adducing of additionalevidence is concerned, the Tribunal has held that there is no bar orerror in the order of the CIT (A) because the additional evidence wasduly put to the Assessing Officer before entertaining the same. It isappropriate to mention that the additional evidence was adducedshowing the amount donated by the donors and their confirmation.The donors had disclosed their Permanent Account Numbers, copiesof the Income-tax Returns and Balance Sheets. The donations weremade by way of Account Payee Cheques. It was in the aforesaidbackground that the additional evidence of impeccable character waspermitted to be adduced. The version of the Assessing Officer that itwas assessee’s own money which was routed through various donorshas been found to be conjectural. As a consequence of the additionalevidence, the resultant additions of Rs. 15,00,000/- were deleted. 5.Having heard learned counsel for the revenue on theaforesaid question Nos. 1 and 2, we are of the considered view that noexception is provided to entertain the appeal because once additionalevidence of impeccable character has been lawfully entertained by theCIT(A) by confronting it to the Assessing Officer and the donorshave come forward by confirming the donations by disclosing theirPermanent Account Numbers and balance sheets etc. then doubtsentertained by the Assessing Officer with regard to donations arerendered merely conjectures. If there was any suspicion then the Assessing Officer could have opened the assessment of the donorsand not that of the assessee-respondent. 6.For the reasons aforementioned, we find that no questionof law much less a substantive question of law within the meaning ofSection 206A of the Act would arise warranting admission of theinstant appeal. The appeal is wholly without merit an the same isaccordingly dismissed. (M.M. KUMAR)JUDGE May 19, 2010Pkapoor (JITENDRA CHAUHAN) JUDGE