Ita v. Ita

ITA Nos.487 and 488 of 2007 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA Nos.487 and 488 of 2007Date of decision:20.5.2008 ITA No.487 of 2007Commissioner of Income tax,Ludhiana-II ......Appellant Versus Smt. Sudarshan Gupta throughL/H Smt. Kanika Gupta Prop. M/s Jatindra Engg. Works.,82-R,Indl. Area 'B' Ludhiana ......Respondent ITA No.488 of 2007Commissioner of Income tax,Ludhiana-II Versus ......Appellant Sh. Tilak Raj C/o Pankaj SalesCor., Public Market, OverlockRoad, Ludhiana ......Respondent CORAM:-HON'BLE MR.JUSTICE RAJIVE BHALLAHON'BLE MR.JUSTICE RAKESH KUMAR GARG * * *Present:Mr. Rajesh Sethi, Advocate for the appellant-revenue. * * * Rakesh Kumar Garg, J . These appeals have been filed by the revenue under Section260A of the Income Tax Act, 1961 (hereinafter referred to as the 'Act')against the order dated 2.3.2007 passed by the Income Tax AppellateTribunal, Chandigarh Bench-B, Chandigarh passed in ITANo.707/Chandi/2006 and ITA No.706/Chandi/2006. Since the issues involved in these appeals are inter-relatedand arises from the common order of the Tribunal, both these appeals arebeing disposed of by this common judgement. For the sake of conveniencefacts are being extracted from ITA No.487 of 2007. The assessee is an individual and engaged in the business oftrading of iron and steel in the name of M/s Pankaj Sales Corporation. Theassessee had filed the return declaring an income of Rs.1,28,285/-. Thesaid return was processed under Section 143(1)(a) of the Act, 1961.Subsequently, the Assessing Officer received an information from DDIT(Inv.), Ludhiana that the assessee had indulged in fictitious sale of goodsto M/s Goyal Industries and received cheques aggregating to Rs.7,65,000/-against payment of cash. The Assessing Officer after getting the approvalof the Commissioner of Income Tax-II, Ludhiana reopened the assessmentby issuing notice under Section 148 of the Act on 30.3.2005 which wasserved upon the assessee on the same date. During the course of reassessment proceedings, the assesseewas confronted with the statements of Shri Jatinder Kumar, Prop. M/sGoyal Industries made before the DDIT (Inv.), Ludhiana on 22.11.1999 andon 31.1.2000 under Section 131(1)(A) of the Act on the basis of which theAssessing Officer had formed an opinion that the assessee had paid cashaggregating to Rs.7,65,000/- to Shri Jatinder Kumar, Prop. M/s GoyalIndustries to get the cheques of equal amount. Addition of Rs.7,65,000/-was thus made to the returned income of Rs.1,28,285/- as cash paid out ofundisclosed sources. The appeal filed by the assessee against the order of theAssessing Officer was dismissed by the Commissioner of Income Tax(Appeals) [for short 'CIT(A)'].Being not satisfied with the findings of the CIT(A), theassessee preferred an appeal before the Income Tax Appellate Tribunal,who vide order dated 2.3.2007 passed in ITA No.707/Chandi/2006 whiledeleting the addition of Rs.14,95,000/- made by the Assessing Officer,observed as under: The appeal filed by the assessee against the order of theAssessing Officer was dismissed by the Commissioner of Income Tax(Appeals) [for short 'CIT(A)'].Being not satisfied with the findings of the CIT(A), theassessee preferred an appeal before the Income Tax Appellate Tribunal,who vide order dated 2.3.2007 passed in ITA No.707/Chandi/2006 whiledeleting the addition of Rs.14,95,000/- made by the Assessing Officer,observed as under: “The only issue that survives for our considerationis as to whether at least the addition of Rs.10 lacsoffered by the assessee for taxation to buy peaceof mind is required to be sustained out of theaddition of Rs.14,95,000/-. Considering thetotality of the facts and circumstances of the caseand, in particular, the terms of surrender, we areof the considered view that no addition is justifiedon the basis of surrender made by deceasedassessee's son. In this case, the nature oftransactions was not known to the legal heirs ofthe deceased assessee. They had denied anywrong doing vis-a-vis their transactions with M/sGoyal Industries. So, however, sum of Rs.10 lacswas offered for taxation by Shri Sanjay Gupta sonof the assessee to purchase peace of mind. If theDepartment had accepted the surrender made bythe assessee and allowed peace of mind to theassessee on the basis of the decision of Punjab &Haryana High Court in the case of Banta SinghKartar Singh v. CIT, Patiala125 ITR 239 (P&H),the addition of Rs.10 lacs would be sustainable.So, however, when the Department does not allowthe assessee to buy peace of mind, why shouldassessee be bound by the offer to pay tax. Theoffer has got to be accepted in toto or it has got tobe ignored. In our view it is not enough material to sustain the addition. The surrender also did notprevent the Assessing Officer from any furtherenquiry. The addition had been made in the caseof Shri Tilak Raj Aggarwal also on the basis ofsame material. Therefore, no prejudice has beencaused to the Revenue by surrender of Rs.10 lacsmade by Shri Sanjay Gupta, son of the assesseeduring the course of assessment proceedings. Inthe statement of facts filed before theCommissioner of Income Tax (A) the assesseeclaimed that the surrender of Rs.10 lacs wasobtained from Shri Sanjay Gupta by coercion.Since the Assessing Officer did not allow peace ofmind to the surrender so made by the son of thedeceased assessee due to lack of knowledge, theaddition of Rs.10 lacs is also not justified in thiscase. We accordingly delete entire addition ofRs.14,95,000/- and allow the appeal of theassessee. The decision of Punjab & HaryanaHigh Court in the case of Banta Singh KartarSingh v. CIT, Patiala (supra) is distinguishable onfacts. In that case, penalty had been imposed asagreed by the assessee. The Hon'ble Punjab andHaryana High Court held that an order based onthe agreement cannot give rise to grievance andthe same cannot be agitated in an appeal. In thepresent case, the addition of Rs.14,95,000/- isbased upon the statement of Shri Jatinder Kumar Prop. of M/s Goyal Industries. The terms ofsurrender were not accepted by the AssessingOfficer in regard to offer of Rs.10 lacs for taxation.The assessee was not allowed to buy peace orescape from litigation. The addition ofRs.14,95,000/- is thus deleted.” Aggrieved against the said order of the Tribunal, the revenuehas filed the present appeal challenging the said decision of the Tribunaland has sought to raise the following substantial question of law:- “Whether on the facts and in law, the ITAT waslegally justified in deleting the addition ofRs.14,95,000/- made on account of fictitious salebills in favour of M/s Goyal Industries Ludhiana?” Prop. of M/s Goyal Industries. The terms ofsurrender were not accepted by the AssessingOfficer in regard to offer of Rs.10 lacs for taxation.The assessee was not allowed to buy peace orescape from litigation. The addition ofRs.14,95,000/- is thus deleted.” Aggrieved against the said order of the Tribunal, the revenuehas filed the present appeal challenging the said decision of the Tribunaland has sought to raise the following substantial question of law:- “Whether on the facts and in law, the ITAT waslegally justified in deleting the addition ofRs.14,95,000/- made on account of fictitious salebills in favour of M/s Goyal Industries Ludhiana?” Mr. Rajesh Sethi, learned counsel for the revenue hasvehemently argued that the Tribunal was not justified in deleting theaddition of Rs.14,95,000/- made by the Assessing Officer on the groundthat no such addition was made by the Assessing Officer in the case of Sh.Jatinder Kumar Prop. M/s Jatindra Udyog and Sh. Rajinder Gupta ofLudhiana as their cases were reopened on the same basis. According tothe learned counsel for the revenue, the Assessing Officer is not bound tofollow the order of the other Assessing Officer and deletion on this count isnot justified. We have heard Mr. Rajesh Sethi, learned counsel for therevenue and find no force in the arguments raised by him. The Tribunal after considering the totality of the facts andcircumstances of the case has given a finding that addition on the basis ofsurrender made by deceased-assessee's son is not justified. It has also been found by the Tribunal that there is not enough material on the recordto sustain the addition. In the case in hand, the addition has been made onthe basis of Sh. Jatinder Kumar Prop. M/s Jatindra Udyog Industireswhereby the terms of surrender were not accepted by the AssessingOfficer and, therefore, in view of the decision of this Court, in the case ofBanta Singh Kartar Singh(supra) the addition on the basis of saidstatement is not sustainable. If the Department does not allow theassessee to buy peace of mind, why should the assessee be bound by theoffer to pay tax. The statement of surrender has got to be accepted in totoor it has got to be ignored. Thus, we find no error or infirmity in the order ofthe Tribunal. No question of law arises for the determination of this Courtfrom the order of the Tribunal Thus, both the appeals being devoid ofmerit are dismissed. (RAKESH KUMAR GARG) JUDGE May 20, 2008ps (RAJIVE BHALLA) JUDGE IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.488 of 2007Date of decision:20.5.2008 Commissioner of Income tax,Ludhiana-II Versus ......Appellant Sh. Tilak Raj C/o Pankaj SalesCor., Public Market, OverlockRoad, Ludhiana ......Respondent CORAM:-HON'BLE MR.JUSTICE RAJIVE BHALLAHON'BLE MR.JUSTICE RAKESH KUMAR GARG * * *Present:Mr. Rajesh Sethi, Advocate for the appellant-revenue. * * * Rakesh Kumar Garg, J . For orders, see ITA No.487 of 2007. (RAKESH KUMAR GARG) JUDGE May 20, 2008ps (RAJIVE BHALLA) JUDGE