Ita/112/2014 Of Charanjit Singh v. Commissioner Of Income Tax

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.112 of 2014(0&M)Date of decision: 04.08.2014 Charanjit Singh Vs, .-...- Appe Commissioner of Income Tax (Ludhiana) ..... Respond CORAM: HON BLE MR. JUSTICK AJAY KUMAR MITTALHON BLE MR. JUSTICE FATEH DEEP SINGH Present: Mr. Pankaj Jain, Sr. Advocate with Mr. Divya Suri and|Mr.Sachin Bhardwaj, Advocates for the appellant. Ajay Kumar Mittal,J, 1.This appeal has been preferred by the appellant-assessee underSection 260A of the Income Tax Act, 1961 (in short, “the Act”) against theorder dated 26.9.2013, Annexure A.10 passed by Income Tax AppellateTribunal, Chandigarh Bench ‘B’, Chandigarh (in short, “the Tribunal’) inITA No.788/CHD/2011, for the assessment year 2007-08, claimingfollowing substantial question of law:- ““Whether under the facts and circumstances of the case, thaction for penalty levied under section 271(1)(c) 1sunreasonable, while rendering interpretation to statutory lawvis a vis Judicial decision qua the provisions of section 68 of the Income Tax Act, 1961” ? A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The appellant is anindividual. An agreement was entered between West Point PropertiesPrivate Limited, Rajour1 Garden New Delhi on 27.2.2006 through ShriHarish Bhasin, Director and second party namely S.S.Empires Pvt. Limited,Pritam Singh and Harjinder Kaur etc. for the purchase of 50 acres ofagricultural land at Village Rampur Kalan, Tehsil Derabassi, District Mohaliat the rate of|a15.25 lacs per acre. An amount of“a75 lacs was transferredby West Point Properties Private Limited on 19.4.2006 through chequeNo.4263 favouring Pritam Singh s/o Shri Dalbir Singh from UTI BankLimited, Delhi and received by Pritam Singh. An amount of)“a4.87,27,000/-had already been paid as per one of the terms of the agreement to S.S,Empires Pvt. Limited, Pritam Singh and Harjinder Kaur. On 9.4.2006,Pritam Singh entered into mutual agreement with the appellant for aconsideration of|an1,00,000/- in leu of the’ services qua the help inarranging as mutually agreed the said purchase of 50 acre land and thepayment was received from Shri Rajwant Singh on 3.8.2006 through chequeNo.4226 and credited in the appellant’s saving account. Pritam Singh out ofthe amount of=a75 lacs received on 19.4.2006 trom West Point PropertiesPvt. Limited transferred the said amount oT |<75 lacs to the appellant’s bankaccount in Axis Bank. The appellant withdrew the amount on 21.4.2006from the saving account for the purpose of starting the mutually agreedpurchase of land and similarly an additional amount ofLv45 lacs wastransferred by the West Point Properties Private Limited to Shri Pritam ITA No.112 of 2014 (O&M) ITA No.112 of 2014 (O&M) Singh through cheque No.4262 on 22.4.2006 which was also received byhim. On 10.8.2006, search under section 132 of the Act was conducted onvarlous companies and individuals whereby the appellant was coveredunder it. The Axis bank account of the appellant was closed on 12.8.2006.Except for these transactions, there was no other transaction in the saidaccount. There being disputes amongst the parties, 1t was mutually agreedand decided in compromise deed to refund an amount of |LT3 65 crores outoft whichVC1.20 crores was in the hands of the appellant and the saidamount was returned by the appellant in cash. Thereafter, jurisdiction of theappellant’s case was transferred to Deputy Commissioner of Income Tax(DCIT) Central Circle | Chandigarh through order dated 20.3.2007 undersection 127 of the Act being effective w.e.f 20.3.2007. Notice under section142(1) of the Act was issued on 10.10.2007 to the appellant asking thedetails qua the aforesaid transactions of Shri Pritam Singh. The appellantfiled the return on 14.10.2008 declaring income of41,62,653/- containingcommission income of41,62,653/- and agricultural income of=a1,80,900/-.The written pleadings were furnished on 24.12.2008. After examining thematter, addition of =a1.20 crores was made vide order dated 30.12.2008 andpenalty proceedings were initiated. The revision petition under Section 264of the Act filed by the assessee against the assessment order was dismissedon 31.3.2010 which became final. The Assessing Officer vide order dated30.6.2009 (Annexure A.5) levied penalty of LT40,48,400/-. Aggrieved by theorder, the assessee filed appeal before the Commissioner of Income Tax(Appeals) [CIT(A)]. The CIT(A) dismissed the appeal vide order dated2.6.2011, Annexure A.9. The appellant filed further appeal before the ITA No.112 of 2014 (O&M) Tribunal. Vide order dated 26.9.2013, Annexure A.10, the Tribunaldismissed the appeal. Hence the instant appeal by the appellant-assessee.3]Learned counsel for the appellant with reference to copy ofbank statements and affidavits of the appellant Charanyjit Singh and PritamSingh, three receipts issued by Director of West Point Properties Pvt.Limited, compromise deed, affidavits of Directors of West Point PropertiesPvt. Limited and copy of MOU, submitted that the finding recorded by theTribunal that the assessee had failed to produce any material to justify thegenuineness of the entries amounting to|<1.2 crores in the books of accountwas against the record. It was argued that the findings recorded wereperverse and no penalty could be levied under section 271(1) (c) of the Act. 4After hearing learned counsel for the appellant, we do not findany merit in the appeal. 4]The assessee had not disclosed the bank account maintainedwith UTI Bank, Sector 8, Chandigarh (now Axis Bank) during theassessment proceedings. On calling information from the said bank, theAssessing Officer noticed that the assessee had deposited =a1,20,00,000/- 1nthe said account on 19.4.2006 and 22.4.2006 which remained unexplained,On scrutiny of bank statement, it was found thatLT1,19,90,000/- wastransferred from the account of Shri Pritam Singh on 19.4.2006 and22.4.2006 and there was an entry of ©v1,01,000/- of cash deposited on3.8.2006 in the said account of Pritam Singh. The explanation of theassessee was that he had received some advances from one Shri PritamSingh for purchase of agricultural land on behalf of the company named M/sWest Point Properties Pvt. Limited. It was claimed that as the assessee had ITA No.112 of 2014 (O&M) ITA No.112 of 2014 (O&M) failed to arrange agricultural land for West Point Properties Pvt. Limited,therefore, the entire amount of <1.20 crores was returned back to them. Theassessee was not able to substantiate his version as he had failed to provideany material to show that amount was received by Pritam Singh from M/sWest Point Properties Pvt. Limited. The Assessing Officer had thus addedthe aforesaid amount as unexplained income of the assessee. The revisionalauthority had confirmed the said addition under Section 264 of the Act. Thereference to various documents as contended by learned counsel does notestablish the genuineness or the capacity of Shri Pritam Singh or availabilityof funds with M/s West Point Properties Pvt. Limited. The self servingaffidavits or memorandum of understanding, compromise deed andstatement of account of Pritam Singh from Axis Bank does not help theappellant as the assessee had failed to produce the alleged Shri Pritam Singhor furnish his address or PAN and establish the credentials of the companyM/s West Point Properties Pvt. Limited. The Assessing Officer had thusrightly imposed penalty under Section 271(1)(c) of the Act for concealmentof income amounting to=a40,48,800/.-. This was affirmed by CIT(A) on anappeal by the assessee. The Tribunal in para 21 of its order dated 26.9.2013,Annexure A.10, while rejecting the plea of the assessee and upholding theorder of the CIT(A) had noticed as under:- “21. The learned CIT(A) after extracting above observationfurther observed that MOU was signed by Shri Rajiv Kumarand not by any other party including the assessee 1.e. CharanyitSingh. Further witnesses who have signed the documents aresame those who signed three receipts. Interestingly though theabove documents 1.e. MOU, compromise deed and receiptswere issued on different dates and entry made on differentfurther observed that MOU was signed by Shri Rajiv Kumarand not by any other party including the assessee 1.e. CharanyitSingh. Further witnesses who have signed the documents aresame those who signed three receipts. Interestingly though theabove documents 1.e. MOU, compromise deed and receiptswere issued on different dates and entry made on different locations but the same were signed by the same Notary publicat Khanna (Punjab) on 28.8.2007. After this observation, thelearned CIT(A) has decided the issue vide para 5 which is asunder:- “5. It 1s clear from the detailed order passed by CIT(C)under section 264 that the assessee could not explain thecredits appearing in his bank account despite havingmore than sufficient opportunity both at the time ofassessment proceedings as well as at the time ofappellate proceedings. The explanation given by theassessee that the said money had been received asadvance from Pritam Singh who in turn had received itfrom West Point Properties Pvt.Limited could have beenvery easily proved as genuine if the said persons 1.ePritam Singh or West Point Properties Pvt. Limited hadbeen produced before the AO to confirm the claim ofassessee. However, it 1s seen that the assessee could noteven give the detailed address of the said persons makingit impossible for the AO to cross verify the claim madeby the assessee. The provisions of section 68 clearlyrequire the assessee to discharge the onus cast upon himin order to prove identity, genuineness andcreditworthiness of the person from whom the amountshad been received. However, the assessee apart fromgiving the name of the persons who allegedly gave themoney could not provide any further details to establishthe identity. The copy of the affidavit filed before the AOwherein one Mr. Harish Bhasin claiming to be Directorof West Point Properties Pvt. Limited does not containany reference to the permanent account number of thecompany or the address of the company or theJurisdictional Assessing officer. Therefore, it becomesabundantly clear that the assessee has failed miserably inestablishing the identity. It is further seen that no evidence had been filed to prove that the amountwithdrawn in cash to the tune ofL1,20,00,000/- has beencredited in the books of account of West Point PropertiesPvt. Limited. There was nothing to prevent the assesseefrom filing the necessary evidence in this regard, had theclaim been genuine. Therefore, assessee could also notestablish the creditworthiness of the person from whomhe has claimed to have received/paid the money. Furtherfact that the amount to the tune of 41,20,00,000/- hasbeen deposited 1n assessee’s bank account on 19.4.2006and 21.4.2006 and the same has been withdrawn jin caswithin one day of the deposit 1s not explained by theoryproposed by the assessee. If the theory proposed by theassessee 1S to be believed,there was nothing to preventthe assessee from returning the said amount by chequefrom whom it had been received by cheque. The fact thatit has been withdrawn in cash clearly shows that theintention 1s to block the investigation into the recipientof the said amount. Therefore, assessee also fails inproving the genuineness of transaction. As such, theamount credited 1n the assessee’s bank account has beenrightly assessed as his income from undisclosed sourcesand penalty on the same has been correctly imposed. Theorder of the AO under appeal 1s confirmed.’ We find nothing wrong with the order of the learned CIT(A). Itis to be seen that even the PAN of the company or Shri HarishBasin was not furnished before the Assessing Officer. PAN ofShri Pritam Singh was not filed. In fact the details of PAN inthe affidavit by Shri Harish Bhasin, detail of PAN of thecompany in the affidavit of Shri Harish Bhasin are left blank,Even the column regarding PAN of Shri Harish Bhasin 1s leftblank. Even before us, nothing was filed to improve the case.These facts clearly show that the assessee has not been able toprove the genuineness of the transaction. In the absence of r relevant address also, the Assessing Officer has been preventedto make any enquiry during the assessment proceedings.” 6.The effort of the learned counsel for the assessee has been toreappraise the evidence so as to record a finding other than the one recordedby the Assessing Officer, CIT(A) and the Tribunal. In our opinion, the samedoes not fall within the domain of section 260A of the Act as the viewadopted by the authorities 1s a plausible view. The contention of theappellant had been dispelled by the Assessing Officer, CIT(A) and theTribunal with the observations and findings noted herein above.TdAccordingly, no substantial question of law arises. As a result,the appeal stands dismissed. (Ajay Kumar Mittal)vudge August 04, 2014 .4 g (Fateh Deep Singh)Judge