Commissioner Of Income Tax-I, Ludhiana v. M/S Jodha Ram Tarlok Chand, Ludhiana

ITA No. 54 of 2013 (O&M) IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARHDate of Decision: May 22, 2013ITA No. 54 of 2013 (O&M) Commissioner of Income Tax-I, Ludhiana …Appellant Versus M/s Jodha Ram Tarlok Chand, Ludhiana …Respondent CORAM:HON'BLE MR. JUSTICE HEMANT GUPTA HON’BLE MS. JUSTICE RITU BAHRIPresent: - Mr. Rajesh Katoch, Advocate, for the appellant.HEMANT GUPTA, J. (ORAL) The Revenue is in appeal under Section 260 A of theIncome Tax Act, 1961 against an order passed by the Income TaxAppellate Tribunal, Chandigarh Bench 'B', Chandigarh on25.09.2012 in respect of the assessment year 2008-09. TheRevenue has claimed the following substantial questions of law: i)Whether Hon'ble ITAT was justified in confirmingthe order of Ld. CIT (A) who deleted the entireaddition of ` 30,00,00/- made on account ofunexplained cash deposits in CC account? ii)Whether on the facts and in law, the Hon'bleIncome Tax Appellate Tribunal was justified inconforming the finding of the CIT(A) that assesseehad explained credit entry of cash deposit in the CCaccount by presuming that assessee had producedthe books of account to explain the entries on thebasis of proceeds from the counter sale, in thecontrary CIT (A) has conveniently ignored the candidfinding of Assessing Officer that the assessee has notexplained the source of cash deposits along withproof, as status by Assessing Officer in para-5 of theassessment order dated 13.12.2010? iii)Whether on the facts and in law, the Hon'bleIncome Tax Appellate Tribunal was justified inupholding the order of CIT (A) and ignoring that forthe first time during the course of appellateproceedings before CIT(A) the alleged explanation ofcredit entries in the CC account was attempted to beexplained by the assessee on the basis of proceedsfrom the counter sales meaning thereby that theadditional evidence in shape of explanation of creditentries was first time furnished before the CIT(A) andthe same (Additional evidence) was not forwarded togive opportunity of its verification by AssessingOfficer as it ought to have been being additionalevidence as envisaged under Rule 46A(2)? iv)Whether on the facts and in law, the Hon'bleIncome Tax Appellate Tribunal was justified in holdingthe order of the CIT(A) ignoring the violation of Rule46A(2) by CIT(A), as the CIT(A) did not send theadditional evidence to the Assessing Officer whilesending the letter dated 08.07.2011 to seek thecomment of Assessing Officer, instead CIT (A) pointedout two specific issues without forwarding theadditional evidence where for the first time cashdeposits of CC account was attempted to beexplained in the form of proceeds from the countersales? v)Whether on the facts and in law, the Hon'bleIncome Tax Appellate Tribunal was justified inignoring the finding recorded by the assessing officerin para 5 of the assessment order dated 13.12.2010,where Assessing Officer has clearly stated thatassessee did not cooperate during assessmentproceeding instead he was questioning / contestingthe correctness of AIR information of deposit being inCC account instead of saving account, which clearlyestablishes beyond doubt that assessee neither hadintention to explain the entries / nor attempted toexplain the credit entries during assessment proceedings and the attempt to explain the same wasmade for the first time before CIT(A) in the shape ofAdditional evidence? v)Whether on the facts and in law, the Hon'bleIncome Tax Appellate Tribunal was justified inignoring the finding recorded by the assessing officerin para 5 of the assessment order dated 13.12.2010,where Assessing Officer has clearly stated thatassessee did not cooperate during assessmentproceeding instead he was questioning / contestingthe correctness of AIR information of deposit being inCC account instead of saving account, which clearlyestablishes beyond doubt that assessee neither hadintention to explain the entries / nor attempted toexplain the credit entries during assessment proceedings and the attempt to explain the same wasmade for the first time before CIT(A) in the shape ofAdditional evidence? vi)Whether on the facts and in law, the Hon'bleIncome Tax Appellate Tribunal was correct in law aswell as in the circumstances of the case as the orderof ITAT is erroneous and perverse in as much as thatITAT has failed to appreciate the ground taken by therevenue that CIT(A) has not complied with the spiritand intent of Rule 46A(2) and disposed the groundsummarily without appreciating the fact of the casethat CIT(A) had never forwarded the additionalevidence to Assessing officer where the assessee forthe first time attempt to explain the cash deposit inCC account was made by assessee? vii) Whether on the facts and in law, the Hon'bleIncome Tax Appellate Tribunal was justified inupholding the order of the Ld. CIT(A), ignoring the factthat order of CIT(A) was perverse and erroneous as ithas been passed by ignoring the provisions containedin the Rule 46A(2) of I.T. Rule by not recording themandatory reason for admitting the additionalevidence, as the assessee for the first instanceattempted to explain the deposit before CIT(A)? viii)Whether on the facts and in law, the Hon'bleIncome Tax Appellate Tribunal was justified inconfirming the order of CIT(A) ignoring that law ofnatural justice has not been followed as AssessingOfficer has not been given the opportunity of beingheard that in which one of the four criteria laid downunder Rule 46A(2) the assessee's case fall, so thatRevenue being effected party in the instant case maybe able to rebut the arguments taken by theappellant before the CIT(A)?” The assessee filed its return on 08.10.2008 declaring ITA No. 54 of 2013 (O&M) assessment in terms of Section 143(3) of the Income Tax Act,1961 (for short 'the Act'). During the course of assessment, onthe basis of Annual Information Return (AIR), the cash creditentries amounting to ` 30 lacs was found to be unexplained andconsequently added to the income of the assessee. In an appeal filed by the assessee, learnedCommissioner of Income Tax (Appeals) found that the assesseehas current account with HDFC Bank and that the entries to theextent of ` 1.33 crores in cash have been explained by theassessee on the basis of counter sales as recorded in the books ofaccount. In view of the said fact, the finding of the AssessingOfficer that AIR information constitutes primary evidence wasfound to be wrong and consequently, the addition made by theAssessing Officer was deleted. In further appeal, the arguments raised by the revenuewere that the assessee has failed to give source of deposit in thesaving account, therefore, the addition made by the AssessingOfficer is justified and also that the appeal filed by the assesseehas been decided in violation of Rule 46A(2) of the Income TaxRules, 1962 (for short 'the Rules). The Tribunal found that the Commissioner of IncomeTax (Appeals) forwarded the submissions made by the appellantto the Assessing Officer for his comments and further soughtcomments on the assertion of the assessee that it maintains onlyCurrent Account with HDFC Bank, wherein ` 1.30 crores including` 30 lacs in cash have been deposited. A certificate filed by theassessee from HDFC Bank certifying that the assessee had noSaving Account, was also sent to the Assessing Officer for his ITA No. 54 of 2013 (O&M)-5- The Tribunal found that the Commissioner of IncomeTax (Appeals) forwarded the submissions made by the appellantto the Assessing Officer for his comments and further soughtcomments on the assertion of the assessee that it maintains onlyCurrent Account with HDFC Bank, wherein ` 1.30 crores including` 30 lacs in cash have been deposited. A certificate filed by theassessee from HDFC Bank certifying that the assessee had noSaving Account, was also sent to the Assessing Officer for his ITA No. 54 of 2013 (O&M)-5- comments. The Assessing Officer did not offer any comments onthe specific issue raised but relied upon the importance ofinformation received by the Assessing Officer through AIR insupport of addition made. Learned Tribunal found that theCommissioner of Income Tax (Appeals) has provided opportunityto the Assessing Officer before admitting the additional evidence,therefore, the argument raised that the order of theCommissioner of Income Tax (Appeals) is contrary to Rule 46A(2) of the Rules, is not tenable. Though the revenue has claimed large number ofquestions as substantial questions of law for the opinion of thiscourt, but we find that the issue lies is in narrow compass. Theentry of ` 30,00,000 is on account of counter sales reflected in thecurrent account of the assessee. The assessee has explained thenature of such transaction in appeal. The Commissioner of IncomeTax (Appeals) has taken into consideration additional evidenceafter providing opportunity to the revenue. The Commissioner ofIncome Tax (Appeals) has returned a finding that the assesseehas explained the counter sales to the extent of ` 1.33 croreswhich is inclusive of sale of ` 30 lacs. We find that such finding isa finding of fact which does not give rise to any substantialquestion of law. Consequently, the appeal is dismissed. (HEMANT GUPTA) JUDGE 22.05.2013Atul/Vimal (RITU BAHRI) JUDGE