Comniissioner Of Income Tax,Bilaspur.bilaspur v. Income Tax Appellate Tribunal,Jabalpur

1--.-'^—.........**K*^. [^51-k&^]P.R.N[c....]P.R.N[c....][[-Y][ '>"'"^[...^4-tsK-(:?]][[ '>"'"^[...^4-tsK-(:?]] preswteu^w^^-,[[-Y][ '>"'"^[...^4-tsK-(:?]][[ '>"'"^[...^4-tsK-(:?]]'•"'-"""""'"'" •\^'^.^. IN THE HIGH COURT OF CHHATTISGARH ATBILASPUR TAX CASE No.2-'^— /2006 APPELLANT Comniissioner of Income Tax,Bilaspur.Bilaspur. VERSUS RESPONDENTS 1.Income Tax Appellate Tribunal,Jabalpur. '2.Naresh Wassan,Main RoadKorba (C.G.) APPEAL UNDER SECTION 260-A OF THE INCOME TAXACT, 1961 KS ^^,\v^1/ 1fv.:-1. Shradha wassan W/o SateCY^) [^areshfl^:^2.Miss Kahima Wassan daughterIt-—yl^aresh Wassan a minor ThroughSmt. Shradha Wassan Bothe R/o ^-^^.^^ %• fflGH COURT OF CHHATTISGARHAT BILASPUR COURT OF CHHATTISGARHAT BILASPUR OF CHHATTISGARHAT BILASPUR CHHATTISGARHAT BILASPUR BILASPURJTTAX CASENo.22 of 2006'''., CASENo.22 of 2006'''., of 2006'''., 2006'''., fflGH COURT OF CHHATTISGARHAT BILASPUR COURT OF CHHATTISGARHAT BILASPUR OF CHHATTISGARHAT BILASPUR CHHATTISGARHAT BILASPUR BILASPURJTTAX CASENo.22 of 2006'''., CASENo.22 of 2006'''., of 2006'''., 2006'''.,APPELLANTCommissioner oflncome Tax, Bilaspur.VERSUSRESPONDENTSIncomeTaxAppellateTribunal,Jabalpur & Others.Judgment for considerationSd/-Satish K. AgnihotriJudgeHon'ble Shri Justice Radhe Shyam Shamia c^en.^-g n Sd/-R.S. SharmaJudge -/* Post for pronouncement ofthe judgment on the _S_dscy ofNovember , 2011 Sd/- 6-11-2011 &-U-'t .^ "/.::-s^.i|l^;!3M£-». 1 vy' '<». mOH COURT OF CHHATTISGARH AT BILASPURTAX CASE No. 22 of 2006 "^.. APPELLANTCommissioner oflhcome Tax, Bilaspur. VERSUSRESPONDENTSIncomeTaxAppellateTribunal,Jabalpur & Others. APPEAL UNDER SECTION 260-A OF THE INCOME TAX ACT. 1961 DB: Hon'ble Shri Satish K. Aenihotri &Hon'ble Shri Radhe Shyam Sharma, JJ. Present:Shri Rajeev Shrivastava, Advocate with Shri Sameer Shrivastava,Advocate for the appellant/RevenueShri L.L.Sharma, Advocate with Shri Anand Dadariya, Advocatefor the respondent No. 2 and 3/Assessee. JUDGMENT CDelivered on .. .9. .day ofNovember, 2011) Per SATISH K. AGNIHOTRI, J. 1.The instant appeal has been filed by the Commissioner oflncomeTax, Bilaspur (hereinafter referred to as 'the Revenue') against theorder dated 19.04.2006 passed by the Income Tax Appellate'theTribunal,Jabalpur, (for short Tribunal') in I.T.A No.301/Jab/1999. 2.The appeal of the Revenue was admitted by this Court on13.02.2007 onthe following substantial questions oflaw: "(i). Whether on the facts and in thecircumstances of the case, the Hon'bleIncome Tax Appellate Tribunal wereright in law in deleting the sum of Rs.19,30,000/-addedbytheAssessingOfficer to the assessee's total income asundisclosedloanadvancedbytheassessee within the meaning of Section69 and 69(C) of the Income Tax Act forthe Assessment Year 1992-03? 3. %.V ";'•(ii)Whetheronthefacts andcircumstances of the case the Hon'bleIncome Tax Appellate Tribunal werejustified m law in agreeing that theimpugnedamountconstitutedexamination of assessee's Hotel project,when in fact, and till date i.e. 11 yearsafter the search of April 1999 no suchHotel was either constructed or existed? (iii) That the order of the Tribunal isliable to be set aside being perverse andcontrary to the facts on record." The facts, in brief, relevant for adjudication of the substantialquestion oflaw, as aforestated, are that the business and residentialpremises of the assessee-Naresh Wassan was searched in April,1995 by the Revenue under section 132(1) ofthe Income Tax Act,1961 (for short 'the Act, 1961'). During the course ofsearch, anLIC diary was recovered wherein at page 36 of the said diary,there was a list of persons against whom various amounts werementioned, as under: (1)Haribhai (Umia Hardware)500000/-(2)Nanjibhai100000/-(3)Haribhai150000/-(2)Nanjibhai100000/-(3)Haribhai150000/- (3)Haribhai (4)G.ASwami 100000/-40000/-400000/-40000/-250000/-150000/-100000/-100000/-1930000/- (5)Manoharlal Lamba (6)Mohan Wassaa(7)Romi Narendra Bindra(7)Romi Narendra Bindra (8)Bassi K. Nair The facts, in brief, relevant for adjudication of the substantialquestion oflaw, as aforestated, are that the business and residentialpremises of the assessee-Naresh Wassan was searched in April,1995 by the Revenue under section 132(1) ofthe Income Tax Act,1961 (for short 'the Act, 1961'). During the course ofsearch, anLIC diary was recovered wherein at page 36 of the said diary,there was a list of persons against whom various amounts werementioned, as under: (1)Haribhai (Umia Hardware)500000/-(2)Nanjibhai100000/-(3)Haribhai150000/-(2)Nanjibhai100000/-(3)Haribhai150000/- (3)Haribhai (4)G.ASwami 100000/-40000/-400000/-40000/-250000/-150000/-100000/-100000/-1930000/- (5)Manoharlal Lamba (6)Mohan Wassaa(7)Romi Narendra Bindra(7)Romi Narendra Bindra (8)Bassi K. Nair (9)Amar Singh Chawla ,(10) Rajnaiayan Singh(10) Rajnaiayan Singh (11) Cash Total Rs. .. ':.-^.~^fCl^'''ias.^S.-atfS* A notice under section 143 of the Act, 1961 was issued to theassessee on 11.02.1997 by the Assessing Officer (for short 'theAO') which was served on the assessee on 19.02.1997. Theassessee filed his income tax retum on 22.04.1997 declaring anincome ofRs. 1,60,110/- The case was heard after issue ofnoticeunder section 143(2) which was attended through Advocates andAccountants, written as well as oral submissions were made andexplanations were also filed. The case ofthe assessee was that theamount mentioned in the aforesaid diary was not the advancesmade by the assessee to the parties, but the same was expectedcontribution by the parties for the purpose of hotel business. Insupport ofhis claim, the assessee filed afBdavits ofall the personsstating therein that there was a proposal to invest the aforestatedamount mentioned against their names, for the hotel project ofNaresh Wassan. According to the AO, the financial position ofthose persons were not mentioned in the affidavit. Out of 10persons, statement of five persons namely Rajnarayan Singh,Nanjibhai Patel, Jagmohan Wassan, Haribhai Patel, and ShriKushabraj Lamba s/o Late Manoharlal Lamba were recorded bythe Inspector of Income Tax in his presence. It was fartherobserved that out of five persons, two were not the income taxpayee namely Rajnarayan Singh and Shri Najibhai Patel. It wasfurther stated that it was only a .proposal and the hotel projectcould not be initiated as the money could not be arranged by them.The AO observed that no deponent could tell the date of allegedmeeting which took place regarding construction of the hotel, though, a copy ofthe application dated 20.01.1992 filed before theChiefExecutive Officer, S.A.D.A. Korba, was produced. Thus, fheAO came to the conclusion that the proposed contributionmentioned in the assessee's diary does not appear to be correct butit was the loan given to the said persons by the assessee. It washeld that the amount remained unexplained and therefore, theamount of Rs.19,30,000/- was added to the income of theassessee. Thereagainst,theassesseepreferredanappealbeforetheCommissioner of Income Tax [for short 'the CIT(A)}. TheCIT(A),after having considered all the factscame to theconclusion fhat the amounts, as aforestated, did not represent theloan given by the assessee and the AO was not justified in holdingthat the amount of Rs. 19,30,000/- represented the undisclosedinvestment of the assessee, and thus, deleted the addition of theaforesaid amount. It was further observed that the persons haveshown their willingness to participate in the Hotel project but justbecause they could not intimate the probable source of funds,adverse view cannot be taken. The creditworthiness of thesepersons cannot be doubted. The CIT (A) has referred not onlypage 36 but also page 35 of the diary where there was somediscussion with regard to preparation of food etc. the applicationdated 20.01.1993 made to ftie Chief Executive Officer, S.A.D.A.Korba, also confimied the contention of the assessee that healongwith others, was interested in hotel project on a plot owned by M/s. Omprakash Satyapal Conta-actor, sifuafed in Agroha Road,Korba. The business plaa offhe assessee was also examined by theCIT (A). Thus, it was finally concluded that the entire addition ofRs. 19,30,000/- was based on assumptions that the entries made atpage 36 ofthe diary represented loans advanced to the persons bythe assessee. In the affidavit given by some of the persons, it wasclearly stated that they have neither given nor taken any loanto/from the assessee but they proposed to invest the amount in thehotel project ofthe assessee. Thus, denial ofthe affidavits was notjustified. Accordingly, the order of the AO was set aside and itwas held that the amount of Rs. 19,30,0007- does not representundisclosed investment ofthe assessee. Against the order passed by the CIT (A), fhe Revenue preferred anappeal before the Tribunal. The question before the Tribunal inappeal filed by the Revenue was whether the CIT (A) had erred indeleting the addition ofRs. 19,30,0007- made by the A.O. to theincome from undisclosed source. The Tribunal, having consideredthe entire facts again, held that the reasons assigned by the CIT(A)in deleting the additional income was sound and convincing. In the11 entries made at page 3-6, 10 different names were written andagainst one entry, only term 'cash' was written, holding that theamount mentioned therein was advanced as loans to the persons,was not proper. The afBdavits filed by the persons clearly statedthat they proposed to contribute for the hotel project but no moneyhave been received by the either side. Thus, it does not suggest '^'•, that the loan amount was given to them by the'assessee. In viewof that, the fmdings recorded by the CIT(A) was confumed andthe appeal filed by the Revenue was dismissed, Shri Rajeev Shrivastava, leamed counsel appearing with ShriSameer Shdvastava, leamed Advocate for the revenue wouldsubmit that the CIT (A) as well as the Tribunal have committedmistake in accepting the additional evidence i.e. the affidavits inconto-avention ofRule 46 ofthe Income Tax Rules, 1962 (for short'the Rules, 1962'). In support of his contention, he would rely ondecision ofthis Court in Commissioner oflncofne Tax v. Hi-techAbrasives Ltd.Shri Shrivastava would next submit that theaffidavits could not have been believed for want of corroborativeevidencesas other circumstancescleariysuggested that thestatements on affidavit should not have been accepted as tme. Theabsence ofdenial by the other side would not by itselfbe sufficientto establish the truthfalness of the affidavits. In support of hiscontention, Shri Shrivastava would rely on a decision of the HighCourt ofAllahabad in Sri Krishna v. Commissioner oflncome Tax& Others . Shri Shrivastava would next contend that in terms ofca&h credit, the assessee was required to prove identity of thecreditor, capacity of such creditor to advance the money and thegenuineness of the transaction. In the present case, the assesseemiserably failed to discharge any of this burden. Shri Shrivastavawould rely on a decision of the High Court of Rajasthan in 'vT^ '^^i:'?i-^-.•y/av \». '^1. Rajshree Synthetics (P) Ltd. v. Commissiorier :of Income Tax &Another . 7. ShriShrivastava wouldfurthersubmitthat therewasnoexplanation offered by the assessee in respect of the undisclosedand unexplained income found by the AO, fhus, the AO hadrightly added the same to the total income of the assessee. Insupport of this contention, he would rely on a decision of thisCourt in M/s. Mahesh Ispat Udyog v. The Commissioner oflncomeTax, Raipur . 8. 'vT^ '^^i:'?i-^-.•y/av \». '^1. Rajshree Synthetics (P) Ltd. v. Commissiorier :of Income Tax &Another . 7. ShriShrivastava wouldfurthersubmitthat therewasnoexplanation offered by the assessee in respect of the undisclosedand unexplained income found by the AO, fhus, the AO hadrightly added the same to the total income of the assessee. Insupport of this contention, he would rely on a decision of thisCourt in M/s. Mahesh Ispat Udyog v. The Commissioner oflncomeTax, Raipur . 8. On the other hand, Shri L.L.Sharma, leamed counsel with ShriAnandDadariya,leamedAdvocateappearingfortherespondenVassessee would submit that the findings recorded onthe notings ofthe page 36 ofthe diary, is a finding offact and noquestion of law arises in this appeal for consideration. The entryrecorded at page 36 does not indicate in any manner that theamount shown against such names, was the loan advanced tothem.Allthese personshadfiledaffidavitsaffmning thesubmissions made by the assessee. Even in the examinationconducted by the Inspector of Income Tax, no person who wereexamined, had admitted at any place that they have taken or givenany loan or advanced from/or to the assessee. There is no otherevidence which may lead to any other conclusion as recorded bythe CIT(A) and confirmed by the Tribunal. In support of hiscontention, Shri Sharma would rely on a decision of the High (2002) ITR 331 (Raj)ITA No. 36/2004, decided on 01.11.2011.ITA No. 36/2004, decided on 01.11.2011. x^ '^i'-t-,.^./'/ Court of Madhya Pradesh, in Assistant Commissioner of IncomeTax v. Rajaram & Brothers , wherein it was held that the issuesrelating to addition/deletion under various heads on account ofseizure of some loose papers and documents are issues of fact anddo not involve any interpretation of law. He would also rely on adecision of the High Court of Rajasthan in Commissioner ofIncome Tax v. S.C.Sethi wherein it was held that the fmdingrecorded by the Tribunal, being finding of fact, did not gave rise toquestion of law. It was similarly held in Commissioner oflncome»Tax v. Kailash Chand Sharma.Shri Shanna would furthercontend that the addition of income cannot be made solely on thebasis ofnoting without corroborative evidences. In support ofthiscontention, he would rely on a decision of the High Court ofPunjab & Haryana, in Commissioner of Income Tax v VishalRubber Products , and would pray for dismissal ofthis appeal. Having heard leamed counsel appearing for the parties, perusedthe pleadings and documents appended thereto, it appears that thebasic question in the case on hand is asto whefher the fmding ofthe AO, which was set aside by the CIT (A) aad confirmed by theTribunal, was just and proper. There is no dispute that the AOrecorded the finding on the basis of entries mentioned in the diaryat page 36. The AO has ignored completely the contents of theaffidavits filed by the named persons and even in the examination 9. s (2007)(2005) 274 295 ITR ITR 122 351 (Raj) (MP) 7(2005)198CTR(RaJ)2bl 8 (2003) 264 ITR 542 (P&H) (2003) 264 ITR 542 (P&H) 10. by the Inspector of Income Tax. It was not foitod that there wasany doubt with regard to their proposed contribution in theproposed hotel project to be installed by the assessee. It is a casewhere it is no where found that there was involvement if anyactual transaction ofamount between fhe parties. It appears to be amere proposal where other persons, as they have stated in theiraffidavits expressed their desire to contribute for the hotelproposal. Thus, even ifthe source offund have not been given astohow the money would be arranged, the affidavits caimot be held as•suntrastworthy. The CIT(A) as well as the Tribunal have rightlyconsidered all the facts in detail and came to the conclusion fordisallowing the addition ofthe amount ofRs. 19,30,000/-. 8 (2003) 264 ITR 542 (P&H) (2003) 264 ITR 542 (P&H) 10. by the Inspector of Income Tax. It was not foitod that there wasany doubt with regard to their proposed contribution in theproposed hotel project to be installed by the assessee. It is a casewhere it is no where found that there was involvement if anyactual transaction ofamount between fhe parties. It appears to be amere proposal where other persons, as they have stated in theiraffidavits expressed their desire to contribute for the hotelproposal. Thus, even ifthe source offund have not been given astohow the money would be arranged, the affidavits caimot be held as•suntrastworthy. The CIT(A) as well as the Tribunal have rightlyconsidered all the facts in detail and came to the conclusion fordisallowing the addition ofthe amount ofRs. 19,30,000/-. The next question asto whether there is no contravention of Rule46 ofthe Rules, 1962 raised by the Revenue , has no merit as allthe evidences were discussed before the AO and no additionalevidence was taken on record at the stage of CIT (A) proceedingsor before the Tribunal. Thus, it cannot be held that there was nocompliance ofstatutory requirement ofRule 46 ofthe Rules, 1962.Further, fhe Revenue does not get any assistance from the decisionof this Court in Hi-tech Abrasives Ltd . The other decisions citedby the revenue are also not of any relevance in the facts ofthe caseas there was no circumstances which suggest that the statementmade in affidavit should not be accepted as tme. The decision ofSri Krishnc^ and Rajshree Synthetics (P) Ltcf is also of noassistance in the case on hand. ^ '"'. "^ 11.There is no dispute that it is a pure question bf appreciation offacts as the same has been done on the proper appreciation ofevidence. The finding of the AO was rightly held as erroneous.There is no perversity in appreciation of facts.facts as the same has been done on the proper appreciation ofevidence. The finding of the AO was rightly held as erroneous.There is no perversity in appreciation of facts. 12.The substantial question of law arises for consideration only ifthere is perversity in the finding of fact. The Supreme Court, inVijay Kumar Talwar v. Commissioner oflncome Tax, Delhi, heldas under:there is perversity in the finding of fact. The Supreme Court, inVijay Kumar Talwar v. Commissioner oflncome Tax, Delhi, heldas under: "23. A finding of fact may give rise to a A finding of fact may give rise to asubstantial question oflaw, inter alia, in the eventthe findings are based on no evidence and/orwhilearrivingat thesaidfinding,relevantadmissible evidence has not been taken intoconsideration or inadmissible evidence has beentaken into consideration or legal principles havenot been applied in appreciating the evidence, orwhen the evidence has been misread. (See MadanLal v. Gopi, Narendra Gopal Vidyarthi v. RajatVidyarthi,Commr.ofCiistomsv.VijayDasharath Patel, MetroarkLtd. v. CCE and W.B.ElectricityRegulatoryCommission v.CESCLtd.)".the findings are based on no evidence and/orwhilearrivingat thesaidfinding,relevantadmissible evidence has not been taken intoconsideration or inadmissible evidence has beentaken into consideration or legal principles havenot been applied in appreciating the evidence, orwhen the evidence has been misread. (See MadanLal v. Gopi, Narendra Gopal Vidyarthi v. RajatVidyarthi,Commr.ofCiistomsv.VijayDasharath Patel, MetroarkLtd. v. CCE and W.B.ElectricityRegulatoryCommission v.CESCLtd.)". 13.This Court, in Commissioner of Income Tax,Raipur v.ShriMangalchand Parekh, GE Road, Rajnandgaon, observed asMangalchand Parekh, GE Road, Rajnandgaon, observed as under: 13.This Court, in Commissioner of Income Tax,Raipur v.ShriMangalchand Parekh, GE Road, Rajnandgaon, observed asMangalchand Parekh, GE Road, Rajnandgaon, observed as under: "30. In view of the foregoing, we are of the In view of the foregoing, we are of theconsidered opinion that fhe findings recorded bythe CIT (A) and affmned by the ITAT are basedon proper appreciation of facts and are notperverse,[being][ correlated][ with][ each][ and][ every]transaction. Thus, the' issue is purely question offacts. No question of law, more so substantialthe CIT (A) and affmned by the ITAT are basedon proper appreciation of facts and are notperverse,[being][ correlated][ with][ each][ and][ every]transaction. Thus, the' issue is purely question offacts. No question of law, more so substantial Amit questions of law, as aforestated, aris'e in the factsofthe case. 31. As an upshot, both the appeals being bereft ofmerit, are liable to be and are hereby dismissed." 14.The instant appeal involves only on the question of facts, as thefacts have been determined by the CIT (A) and affirmed by theTribunal. Thus, it is a question of facts alone and no question oflaw, much less substantial question of law, arise in this case forconsideration under section 260-A ofthe Income Tax Act. 15.The appeal is accordingly dismissed. No order asto costs. Sd/-Satish K. AgnihotriJudge Sd/-R-S. SharmaJudge