Iqbal Singh v. Commissioner Of Income Tax

ITA No. 482 of 2009 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Iqbal Singh Versus Commissioner of Income Tax ITA No. 482 of 2009 Date of Decision: 17.8.2010 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. S.K. Mukhi, Advocate for the appellant. Mr. Tajender K. Joshi, Advocate for the respondent. AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the assessee underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order dated 31.12.2008 passed by the Income Tax AppellateTribunal, “B” Bench, Chandigarh (hereinafter referred to as “theTribunal”) in ITA No. 109/CHANDI/2008 for the assessment year 2004-05, proposing to raise the following substantial question of law:- “i)Whether on the facts and in the circumstances,evidences on record and established principlesof Law the ITAT was justified in confirming theorders of the authorities below in finalizing theassessment u/s 144 of the Income Tax Act,evidences on record and established principlesof Law the ITAT was justified in confirming theorders of the authorities below in finalizing theassessment u/s 144 of the Income Tax Act, ii) iii) iv) 1961 without conforming to the proviso toSection 144 (1) of the Income Tax Act, 1961?Whether on the facts and circumstances,evidences on record and established principlesof Law the ITAT was justified in confirming theorders of the authorities below in treating thedeposits in banks as income from unknownsources as explained being out of agriculturalincome duly declared and accepted in theReturn of the year under appeal and alsoconfirmed by the CIT (A) against which thedepartment has not even filed any appealbefore the ITAT? Whether on the facts, circumstances andevidences on record and established principlesof Law the ITAT was justified in confirming theorders of the authorities below in treating thedeclared and assessed/accepted income of theson from Horse breeding and sale thereof whobeing of age of majority and actively engagedin such like operations is eligible to beassessed individually and as so assessed asunexplained income of appellant from unknownsources? Whether on the facts, circumstances andevidences on record and established principles of Law the ITAT was justified in confirming theorders of the authorities below in treating themarriage gift of Rs.8,00,000/- received by theson of the appellant in the hands of theappellant while the son being of age of majorityand as so assessed as unexplained income ofappellant from unknown sources is whollyunjustified and is against the establishedprinciples of Income Tax Act, 1961 and leadsto double taxation? v) Whether on the facts, circumstances andevidences on record and established principlesof Law the ITAT was justified in confirming theorders of the authorities below in treating thedeposits in banks to the extent of Rs.3,10,000/-as income from unknown sources as explainedbeing out of earlier withdrawals from the bank,earlier years agricultural income and pastsavings etc.?” 2.The facts necessary for adjudication of the present appealmay be noticed. The assessee is engaged in agricultural operationswhich was exempted from tax. Upon notice dated 30.11.2005 issued bythe Assessing Officer, the assessee filed his return declaring an incomeof Rs.2,20,000/- from agriculture and taxable income as NIL. TheAssessing Officer made additions of Rs.9,30,500/- and Rs.15,10,000/-on account of various deposits in the bank accounts and Rs.36,544/- 2.The facts necessary for adjudication of the present appealmay be noticed. The assessee is engaged in agricultural operationswhich was exempted from tax. Upon notice dated 30.11.2005 issued bythe Assessing Officer, the assessee filed his return declaring an incomeof Rs.2,20,000/- from agriculture and taxable income as NIL. TheAssessing Officer made additions of Rs.9,30,500/- and Rs.15,10,000/-on account of various deposits in the bank accounts and Rs.36,544/- on account of interest accrued in the bank accounts. The totalassessment was made at Rs.24,65,040/- plus agricultural income ofRs.1,32,000/-. Against the order of the Assessing Officer, the assesseeapproached the Commissioner of Income Tax (Appeals) [in short “theCIT (A)] who upheld the order of the Assessing Officer. On furtherappeal, the Tribunal affirmed the order of the CIT (A) and dismissed theappeal. 3.We have heard learned counsel for the parties and perused the record.4.The challenge by the assessee-appellant in the presentappeal is regarding additions of Rs.9,30,500/-, Rs.8,00,000/- andRs.3,10,000/- made by the Assessing Officer. 5.The addition of Rs.9,30,500/- was made by the AssessingOfficer on account of undisclosed income deposited in the bankaccount. The Tribunal while rejecting the said plea of the assessee hadrecorded as under:- “We have considered the rival submissions carefully.In this case, evidently the Assessing Officer rejectedthe explanation of the assessee with regard to a sumof Rs.4,50,000/- on the ground that there was noevidence to substantiate the fact that the same wasout of sale proceeds of agriculture produce. No suchevidence has been led by the assessee either beforethe CIT (Appeals) or even before us. Therefore, thesaid addition is liable to be sustained. We hold so.Even with regard to the sum of Rs.4,80,000/- deposited in the bank account of the son of theassessee, we are inclined to uphold the action of theAssessing Officer. Admittedly, there is no evidencebrought on record by the assessee to substantiatethat his son was having any independent source ofincome. There is also no evidence to support theplea that his son was doing activities of personal skill.Leave alone producing of any evidence, there is noidentification also of the source of income in thehands of the son. We therefore, find no justification tointerfere with the conclusions drawn by the lowerauthorities on this issue. Hence the addition ofRs.9,30,500/- made by the Assessing Officer ishereby affirmed.” 6.The Tribunal also upheld the addition of Rs.8,00,000/-which was alleged to have been received as gift from Shri Ruldu Singh,i.e. father-in-law of the assessee at the time of marriage. The Tribunalhad upheld the finding that the explanation of Shri Ruldu Singh was notreliable and he was not a man of means who could have gifted a sum ofRs.8,00,000/-. The relevant finding of the Tribunal to this effect readsthus:- “We have examined the rival claims on this aspect.From the discussion made by the Assessing Officerin para 3 of his order, we find that his factual findingsare that Shri Ruldu Singh is not a man of means.The Assessing Officer observes that Shri Ruldu 6.The Tribunal also upheld the addition of Rs.8,00,000/-which was alleged to have been received as gift from Shri Ruldu Singh,i.e. father-in-law of the assessee at the time of marriage. The Tribunalhad upheld the finding that the explanation of Shri Ruldu Singh was notreliable and he was not a man of means who could have gifted a sum ofRs.8,00,000/-. The relevant finding of the Tribunal to this effect readsthus:- “We have examined the rival claims on this aspect.From the discussion made by the Assessing Officerin para 3 of his order, we find that his factual findingsare that Shri Ruldu Singh is not a man of means.The Assessing Officer observes that Shri Ruldu Singh admitted that there was no evidence in supportof his plea that he was making sale of agricultureproduce. The said Shri Ruldu Singh also failed toexplain the details of the expenditure on the marriageof his daughter with the son of the assessee. TheAssessing Officer has also referred to the reply of theassessee dated 1.05.2006 wherein it has beenadmitted that he has not received any gift from anyrelative. This fact has also prevailed with theAssessing Officer in holding that the allegedexplanation of the assessee of having been receiveda gift of Rs.8,00,000/- from Shri Ruldu Singh was notreliable. Even the version of Shri Ruldu Singh hasbeen held to be unreliable. We find no reasons tointerfere with the inferences drawn by the AssessingOfficer having regard to the verification exercisecarried out during the assessment proceedings. Thediscussion made by the Assessing Officer in theassessment order leaves no doubt that Shri RulduSingh was not a man of means to have gifted a sumof Rs.8,00,000/- to the assessee. The onus in thisregard, which was cast on the assessee, has notbeen discharged. As a result, the addition made bythe Assessing Officer on this aspect is herebysustained. The assessee fails on this aspect ishereby sustained. The assessee fails on this Ground.” 7.The issue relating to addition of Rs.3,10,000/- which wason account of cash deposited in the bank account on 15.10.2003 wasreferred back to the Assessing Officer for fresh adjudication by theTribunal with the following observations:- “In this connection, we find that before the AssessingOfficer, the assessee submitted that Rs.3,10,000/-was deposited by him on 15.10.2003 out of theamount of Rs.4,00,000/- withdrawn on 1.10.2003.The plea was rejected on the ground that theAssessing Officer found that the transaction ofRs.3,10,000/- was shown by the bank as banktransfer and not as cash deposit. The counsel for theassessee has referred to page 13 of the Paper Bookshowing that the entry of Rs.3,10,000/- was cash andnot as a bank transfer. The limited plea of theassessee now is that the benefit of the cash availableout of the earlier withdrawal made on 1.10.2003 begiven to the assessee while making the addition inrelation to the sum of Rs.3,10,000/- deposited on15.10.2003. On this aspect, we are inclined torestore the issue to the Assessing Officer to examinethis limited issue afresh. Notably, the certificateissued by the banker, which is placed at page 13 ofthe Paper Book has not been referred to by theAssessing Officer in his order for the reason that the same was not before him. Therefore, the AssessingOfficer may consider it and adjudicate theexplanation regarding Rs.3,10,000/- afresh.” 8.Learned counsel for the appellant made strenuous effort toarrive at a conclusion favourable to the assessee. According to him, theadditions of Rs.8,00,000/- and Rs.9,30,500/- made in the income of theassessee and remanding the issue of Rs.3,10,000/- to the AssessingOfficer was unjustified and the conclusion drawn by the authoritiesbelow is perverse. same was not before him. Therefore, the AssessingOfficer may consider it and adjudicate theexplanation regarding Rs.3,10,000/- afresh.” 8.Learned counsel for the appellant made strenuous effort toarrive at a conclusion favourable to the assessee. According to him, theadditions of Rs.8,00,000/- and Rs.9,30,500/- made in the income of theassessee and remanding the issue of Rs.3,10,000/- to the AssessingOfficer was unjustified and the conclusion drawn by the authoritiesbelow is perverse. 9.It has been concurrently recorded by the assessingauthority which has been upheld by the CIT (A) and the Tribunal thatthe additions of Rs.8,00,000/- and Rs.9,30,500/- in the income of theassessee were justified. The addition of Rs.3,10,000/- has beenremanded as the certificate issued by the banker had not beenconsidered by the Assessing Officer. The above findings are purefindings of fact which had been recorded on the basis of appreciation ofmaterial on record. Learned counsel, however, could not point out anyillegality or perversity in the findings recorded which may warrantinterference by this Court. 10.In view of the above, no substantial question of law arisesin this appeal. 11.The appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE August 17, 2010gbs (ADARSH KUMAR GOEL) JUDGE