Commissioner Of Income Tax,Faridabad v. Rakesh Kumar Garg, J

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.359 of 2007 Date of decision: 7.5.2008 Commissioner of Income tax,Faridabad ......Appellant Versus Smt. Premwati w/o Sh. RamaNand, VPO-Sukhrali, Gurgaon......Respondent CORAM:-HON'BLE MR.JUSTICE RAJIVE BHALLAHON'BLE MR.JUSTICE RAKESH KUMAR GARG * * * Present:Mr. Yogesh Putney, Advocate for the appellant-revenue. * * * Rakesh Kumar Garg, J . The revenue has filed the present appeal under Section 260-Aof the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) againstthe order dated 27.9.2006 passed by the Income Tax Appellate Tribunal,Delhi Bench “B” in ITA No.1448/Del/2004 for the assessment year 1997-98 raising the following substantial questions of law:- “(i) Whether on the facts and circumstances of thecase, the order of Hon'ble ITAT is perverse in view ofthe fact that the Hon'ble ITAT decided the issue on merepresumption without ascertaining the correctness of theplea taken by the assessee regarding availability offunds to the extent of Rs.4,50,000/- ?. (ii)“Whether on the facts and circumstances of thecase, the Hon'ble ITAT is right in holding thatassessment of interest cannot be made until the matteris finally settled by the High Court, in contradiction with the judgement of Hon'ble jurisdictional High Court ofPunjab and Haryana following the judgement of ApexCourt in the case of CIT v. Rama Bai(181 ITR 400)whereby interest on enhanced compensation is to betaxed on accrual basis irrespective of the pendency ofappeal in higher courts in respect of enhancedcompensation. [ITANo.176 of 2005 and ITA No.177 of2005 in the cases ofCIT, Faridabad v. Naresh KumarandCIT, Faridabad v. Dilbagh Singh, respectively]. Assessment proceedings were started on the basis of aninformation received by the Assessing Officer that Shri Rama Nand,husband of Smt. Prem Wati had received huge compensation foracquisition of property amounting to Rs.83,29,889/- along with interest ofRs.32,30,239/-.The assessee did not respond to notices u/s 148 or 142(1)of the Income-Tax Act and therefore, the Assessing Officer completed exparte assessment of assessee as legal heir of late Sh. Rama Nand on atotal income of Rs.95,92,840/- under Section 144 of the Act. Variousdeposits found in the account of the assessee were treated as unexplainedand added in the income of the assessee. Against the assessment order dated 20.12.2002, the assesseefiled an appeal before the Commissioner of Income Tax (Appeals),Panchkula) [for short the 'CIT(A)'] raising legal grounds besideschallenging addition on facts and circumstances of the case. The CIT(A)allowed the appeal of the assessee partly vide its order dated 2.1.2004. Still aggrieved against the order of the CIT(A), the assesseefurther filed an appeal before the Income Tax Appellate Tribunal DelhiBench 'B' Delhi, challenging the additions amounting to Rs.49,500/-, Rs.4,50,000/- and a sum of Rs.4,10,500/- as unexplained income of theassessee. The assessee also challenged addition made on account ofinterest received on the enhanced compensation. The Tribunal vide itsorder dated 27.9.2006 held that the interest on enhanced compensationreceived by the assessee was liable to be taxed on accrual basis ratherthan on receipt basis by following the decision of the Hon'ble SupremeCourt in the case of Rama Bai v. CIT181 ITR 400. Vide the impugnedorder, the Tribunal also deleted the addition of an amount of Rs.49,500/-and a sum of Rs.4,50,000/- which were added as unexplained income ofthe assessee. Not satisfied with the judgement of the Tribunal, the revenuehas filed the present appeal challenging the impugned order of theTribunal raising the substantial questions of law as mentioned above. Not satisfied with the judgement of the Tribunal, the revenuehas filed the present appeal challenging the impugned order of theTribunal raising the substantial questions of law as mentioned above. Mr.Yogesh Putney, learned counsel for the revenue, has veryfairly stated that question No.2 regarding the assessment of interest on theenhanced compensation received by the assessee has been finallydetermined by a judgement of this Court in ITA No.490 of 2007 decided on26.3.2008 titled as The Commissioner of Income Tax-Faridabad v. Shri Hardwari lal, HUF, s/o Tika Ram, Village Jharsaintly, Ballabgarh, andtherefore the said question does not survive. Learned counsel for therevenue assailed the impugned order of the Tribunal on the ground that theissue in dispute has been decided by the Tribunal in favour of the assesseeon mere presumptions, as the details of bank account, where the amountswere deposited and out of which Rs.4,50,000/- is claimed to have beenwithdrawn for deposit of Rs.4,50,000/- on 28.5.1996 were neitherfurnished by the assessee nor called for by the Tribunal and, therefore, theorder of the Tribunal is perverse. We have heard learned counsel for the revenue and areunable to accept the contentions raised by him. A perusal of the impugned order of the Tribunal shows thatafter appreciating the evidence and other documents on record of the case,the Tribunal has given a pure finding of fact regarding the availability of thefunds to the assessee. The relevant part of the order of the Tribunal isreproduced hereunder:- “In the second part of the same para, theassessee has challenged addition to the extent ofRs.4,50,000/-. It is stated that revenue authorities did notallow even benefit of two drafts mentioned in the sale deeddated 14.5.1996, referred to above. It is claimed that abovedrafts were deposited by husband of the assessee in somebank account and later on Rs.4,50,000/- were withdrawn andutilized in deposit on 28.5.1996. Having regard to proximity ofdates i.e. 14.5.1996 when sale deed was executed and whenamount of Rs.4,50,000/- was received through drafts, and28.5.1996, (the date on which Rs.4,50,000/- were utilized inthe deposit), we are inclined to accept the claim of theassessee that Rs.4,50,000/- the amount of drafts wasavailable with the assessee as on 28.5.1996 and, therefore,benefit of above amount in working out unexplainedinvestment has to be allowed to the assessee. We orderaccordingly.” It may further be seen that the explanation of the assesseewith regard to Rs.49,500/- received by him in cash at the time of execution of the sale deed dated 14.5.1996 has been accepted by the Department,as the finding of the Tribunal in this regard has not been challenged. However, the other part of the same explanation of the assessee i.e. Thedrafts of Rs.4,50,000/- were received by the assessee on 14.5.1996 at thetime of execution of the sale deed in addition to a sum of Rs.49,500/- incash as discussed above and the said drafts were deposited in some bankaccount and later on the said amount of Rs.4,50,000/- was withdrawn andutilised in deposit on 28.5.1996, has not been accepted by the Departmentwithout any rhyme or reason. The Department has not placed on recordany evidence to rebut the contention of the assessee before any of thelower Authorities including the Tribunal. The claim of the assessee i.e.availability of funds of Rs.4,50,000/-, has been accepted by the Tribunalafter appreciating the evidence on record. Even before this Court, counselfor the revenue has failed to show any perversity in the said findings.Thus, we are not inclined to interfere in the findings of fact recorded by theTribunal. No substantial question of law arises for the determination of thisCourt in the appeal and the same is hereby dismissed. (RAKESH KUMAR GARG) JUDGE May 7, 2008ps (RAJIVE BHALLA) JUDGE