Ita/36/2014 Of Sharanjit Singh v. Commissioner Of Income Tax Ludhiana

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.36 of 2014(0&M)Date of decision: 19.8.2014 Sharanjit Singh Prop. M/s Royal Resorts, VPO Threeke Ludhiana(Punjab) Vs, ..-.-- Appe Commissioner of Income Tax,Ludhiana (Punjab) .....Responde CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’BLE MR. JUSTICE FATEH DEEP SINGH Present: Mr. Pankaj Jain, Sr. Advocate withMr. Divya Suri and Mr. Sachin Bhardwaj, Advocates for|the appellant, Ajay Kumar Mittal, J. inThe delay in refiling the appeal is condoned. 2.This appeal has been preferred by the appellant-assessee undersection 260A of the Income Tax Act, 1961 (in short, “the Act’) against theorder dated 24.8.2012, Annexure A28 passed by Income Tax AppellateTribunal, Chandigarh Bench ‘A’, Chandigarh (in short, “the Tribunal’) inITA No.65/CHD/2012, tor the assessment year 2007-08, claiming followingsubstantial questions of law:- 1) Whether under the facts and circumstances of the case, theTribunal order is sustainable for recording erroneous findingsof facts being contrary to respondent report dated 27.8.2009No DDIT/Inv. 1/Ldh/09-10/356 i1) Whether under the facts and circumstances of the case, thaction for cash credit additions are sustainable, whilereturning findings for there being requiring mandatorily anagricultural income of the purchaser, within the State ofPunjab before making any investment for purchase inagricultural land?action for cash credit additions are sustainable, whilereturning findings for there being requiring mandatorily anagricultural income of the purchaser, within the State ofPunjab before making any investment for purchase inagricultural land? i11)Whether under the facts and circumstances of the case, theaddition under section 68 is sustainable while accepting!fulfillment of the requirements of provisions of law andwhile adversely interpreting the undertaking signed beforeWestern Union?addition under section 68 is sustainable while accepting!fulfillment of the requirements of provisions of law andwhile adversely interpreting the undertaking signed beforeWestern Union? 3A few facts relevant for the decision of the controversyinvolved as available on record may be noticed. The assessee is running aresort in the name of ‘Royal Resort’ at Ludhiana. The assessee filed hisreturn of income declaring total income ofLT254760/- on 12.3.2008, whichwas processed under section 143(1) of the Act. The case was selected forscrutiny. Notice under section 143(2) of the Act was issued on 26.9.2008 tothe assessee asking him the source of investments made in the fixed assetsand immovable property for|L24 lacs. Written submissions were furnishedbefore the Assessing officer dated 14.9.2009 inter alia stating the purchaseof land at Village Dewatwala in Punjab measuring 60 kanals 17-1/2 marlasforLy38,77,000/- including registration expenses wherein the share of theassessee was half. The said land was purchased from Shri Gurte] Singh sonof Shri Avtar Singh, resident of Village Dewatwala, Sub Tehsil Mullanpur,Dakha, District Ludhiana. The source for investment were evident fromwithdrawals of =a24 lacs made from books of Royal Resorts. There wasinitiation of enquiry proceedings by the Assistant Director of Income Tax(Investigation) 1, Ludhiana for explaining the source of purchase of land.Not being satisfied, the proceedings were concluded determining the taxableGURBAX SINGH2014.10.28 11:53I attest to the accuracy andintegrity of this documentHigh Court Chandigarh ITA No.36 of 2014 (O&M) income at an amount of“a33,50,288/- vide order dated 29.12.2009.Aggrieved by the order, the assessee filed appeal before the Commissionerof Income Tax (Appeals) |CIT(A)]|, which was dismissed vide order date28.12.2011, Annexure A.25. The assessee filed further appeal before theTribunal which was also dismissed vide order dated 24.8.2012, AnnexureA.28. Hence the instant appeal by the appellant-asesssee. ITA No.36 of 2014 (O&M) income at an amount of“a33,50,288/- vide order dated 29.12.2009.Aggrieved by the order, the assessee filed appeal before the Commissionerof Income Tax (Appeals) |CIT(A)]|, which was dismissed vide order date28.12.2011, Annexure A.25. The assessee filed further appeal before theTribunal which was also dismissed vide order dated 24.8.2012, AnnexureA.28. Hence the instant appeal by the appellant-asesssee. 4Learned counsel for the appellant submitted that there ismisreading of evidence. The report of the Deputy Director of Income Tax(DDI) in respect of purchase of agricultural land for<a38,77,000/- was infavour of the assessee. It was further urged that by furnishing the source, hehad demonstrated regarding the other transactions which were also genuine. 5After hearing learned senior counsel for the assessee, we arenot impressed with the submissions. 6_The assessee had declared =a2,94,760/- in the return of income filed on 12.3.2008. The Assessing Officer finalised the assessment atL33,50,288/-. The following additions were made by the Assessing Officer in the returned income which are subject matter in the present appeal:- a) Receipt from father which remained14,77,000/-unsubstantiated.unsubstantiated. b) Amount introduced as cash credit 7,20,000/- but source not proved and added under Section 68 of the Act. c) Unsecured loan from his non8,98,528/- resident friends/relatives without any evidence to establish its authenticity. va Taking up the first addition of a14,77,000/-, the assessee had furnished the explanation as under:- “Amount withdrawn in the books of M/s Royal Resorts. Copy of agriculture 24,00,000/- land a/c attached. Amount withdrawn trom Saving Bank10,00,000/-Account No.4032 with [ob on 26.3.2007maintained by Shgri Jagdev Singh-father and Sharanjit Singh. Copy ofbank statement attached.Amount received from M/s Garg Seeds Corp. 4,00,000/-by Shri Jagdev Singh against sale ofagriculture produce.Amount spent by Shri Jagdev Singh out 77,000/- 4,77,000/-of his income shown in his income tax -------------------------return.38,77,000/-” The perusal of the report of the DDI (inv.)-I on which reliance has beenplaced by learned counsel for the assessee (appended as Annexure A.16with appeal) clearly spells out that the explanation furnished before theassessing authority and the DDI (Uinv.)-I is identical. The Assessing Officehad rejected the explanation of the assessee with the followingobservations:- “I have considered the reply of the assessee which is notacceptable due to the following reasons:acceptable due to the following reasons: 1) The assessee has not declared any agricultural income in hireturn of income.return of income. i1) The assessee has claimed, the receipt of<14.77 lacs from hisfather, the relevant entry does not appear in the balance sheetof the assessee. Further the entry shown in the bank accountof Shri Jagdev Singh appears on 26.3.2007. As per the saledeed the seller has received the full amount of considerationbefore the date of transfer/date of registration. In this casedate of registration was 26.3.2007.father, the relevant entry does not appear in the balance sheetof the assessee. Further the entry shown in the bank accountof Shri Jagdev Singh appears on 26.3.2007. As per the saledeed the seller has received the full amount of considerationbefore the date of transfer/date of registration. In this casedate of registration was 26.3.2007. ili) he assessee has claimed to have received a sum Of |=4,00,000/- and<a77000/- trom M/s Garg Seeds Corporation,a proprietary concern of Shri Rajinder Kumar on behalf ofhis father Shri Jagdev Singh out of agricultural income of hisfather. The assessee failed to produce the concerned person.4,00,000/- and<a77000/- trom M/s Garg Seeds Corporation,a proprietary concern of Shri Rajinder Kumar on behalf ofhis father Shri Jagdev Singh out of agricultural income of hisfather. The assessee failed to produce the concerned person. ili) he assessee has claimed to have received a sum Of |=4,00,000/- and<a77000/- trom M/s Garg Seeds Corporation,a proprietary concern of Shri Rajinder Kumar on behalf ofhis father Shri Jagdev Singh out of agricultural income of hisfather. The assessee failed to produce the concerned person.4,00,000/- and<a77000/- trom M/s Garg Seeds Corporation,a proprietary concern of Shri Rajinder Kumar on behalf ofhis father Shri Jagdev Singh out of agricultural income of hisfather. The assessee failed to produce the concerned person. Entry of this amount also not appearing on the balance sheetof the concern M/s Royal Resort. 3 1 In view of the above discussion source of investment of=147000/- made in purchase of agricultural land is notSatisfactory. An addition ofL1477000/- 1s made to the totalincome of the assessee on account of the unexplainedinvestment made in purchase of agricultural land. Theassessee has filed inaccurate particulars in respect of hisincome of LT1477000/-.” On appeal, it was affirmed by CIT(A). The Tribunal on further appeal,endorsed it with the under quoted findings:- “5. We have carefully perused the rival submissions, facts ofthe case and relevant records, including the paper book andbrief synopsis filed by the learned AR of appellant. In this case,in the course of assessment proceedings, it was found by theAO that assessee had added the fixed assets of agriculture land,to the tune ofan24,00,000/-. The Assessing officer soughtjustification and details of fixed assets and immovable assetsincluding the source of investment in such assets. The appellantdeclared that he had purchased agricultural land for |438,77,000/-. However, value of agricultural land in the books ofaccount of the assessee was shown at Li24,00,000/-. TheAssessing officer sought explanation for such difference in theinvestment made in the purchase of agricultural land. On|appreciation of the submissions filed by the assessee, theAssessing officer found the explanation as not acceptable onthe ground that the assessee had not declared any agriculturalincome in the return of income. It was further observed by theAssessing officer that the assessee had claimed receipt of L14.77 lacs from his father and the relevant entry does notappear in the balance sheet of the assessee. Further, the entriesShown in the bank account of Shri Jagdev Singh appears on26.3.2007. As per the sale deed, the seller had received the fullamount of consideration before the date of transfer/date of registration i.e. 26.3.2007. The assessee claimed to havereceived a sum of |-4,77,000/- from M/s Garg Seedscorporation, a proprietary concern of Shri Rajender Kumar, onbehalf of his father Shri Jagdev Singh, out of agriculturalincome of his father. However, the assessee failed to producethe concerned person. Entries of this amount were also notappearing in the balance sheet of M/s Royal Resorts. In view ofthis, the Assessing officer made the addition of|14,77,000/-treating the investment in the purchase of land as unexplainedinvestment. Learned CIT(A) on appreciation of the submissionfiled before him upheld the addition.....” No satisfactory explanation was furnished to rebut the findings of theAssessing Officer, CIT(A) and the Tribunal. Thus, the reliance on the reportof DDI Uinv)-I by the learned counsel is of no assistance to the assessee, S_Examining the addition of —-7,20,000/- which had beenintroduced as unexplained cash credit, the Assessing Officer had added thesame under Section 68 of the Act as no acceptable explanation wasfurnished by the assessee. The CIT(A) had affirmed the additions with thefollowing observations:- No satisfactory explanation was furnished to rebut the findings of theAssessing Officer, CIT(A) and the Tribunal. Thus, the reliance on the reportof DDI Uinv)-I by the learned counsel is of no assistance to the assessee, S_Examining the addition of —-7,20,000/- which had beenintroduced as unexplained cash credit, the Assessing Officer had added thesame under Section 68 of the Act as no acceptable explanation wasfurnished by the assessee. The CIT(A) had affirmed the additions with thefollowing observations:- “6. I have gone through the contention of the appellant'scounsel and also perused relevant submissions of the appellant,The assessee has not shown any agriculture income in his returnof income. But the assessee had a credit balance of |=33,97,623/- of agriculture income in the balance sheet of hisproprietary firm M/s Royal Resorts. The assessee claimed thatthe said income represented agriculture income of his father'sHUF, Shri Jagdev Singh Grewal HUF, who has sold theagriculture produce through the assessee and payments havebeen received in assessee's bank accounts. [It has not beenclarified by the assessee as to why agriculture income of HUFwas not received in the saving account of the HUF. The savingaccount in which the said receipts have been received belonged to assessee and even account was operated by the assessee,Since the assessee did not have any source of agricultureincome, hence these credit entries of L7,20,000/- would have tobe considered as assessee's income from his resort business|Hence this ground of appeal of assessee is also rejected andaddition of TL7,20,000/- is confirmed.” The Tribunal affixed its seal of approval by rejecting the appeal of theassessee. There is nothing on record to upset the findings of the AssessingOfficer, CIT(A) and the Tribunal which is affirmed. Q |Lastly, the addition of“a8,98,528/- made by the AssessingOfficer on account of unsecured loan from non-resident friends of theassessee/Telatives also remained uncorroborated. The Assessing Officerdecided this issue against the assessee and recorded as under:- “Bh The assessee has introduced a sum oft =a8,98,528/- asunsecured loan from his non resident friends/relatives. Theassessee was aSked to produce the source of these credits. Allthe entries in his bank account came from Western UnionMoney ‘Transfer. The money transferred has obtained anundertaking from the assessee wherein it has been undertakenby the assessee that these receipts are not in shape of loan andadvance. Relevant extracts of the certificate are reproduced asunder:- ‘I undertake that the above mentioned remittance received byme is in nO way commercial or trade related or purchase ofproperty, investment or for credit to the sender's/remitters'NRE/FCNR accounts etc. nor for donation of any kind. Iundertake that the above remittance is purely personal innature towards family maintenance etc. Certain terms andconditions governing the money transfer service you haveselected are set forth on the back of this form. By signing thisform, you are agreeing to those terms and conditions. Inaddition to the transfer fee, western union and its agents also make money from the exchange of currencies, please seeimportant information regarding currency exchange set forthon the back of this form.: 5.1 In view of the above it is clear that the money was notreceived for the purchase of property and it has been receivedfor maintenance of the family. Further this is not a mode ofreceipt of loan from any person. Section 269SS of IT Act,1961 allows acceptance of any loan of deposit by way ofpayee account cheque or payee account draft only if theamount of such loan or deposit or aggregate amount of suchloan or deposit exceeds“a20000/-. | am not satisfied with theexplanation of the assessee and an addition of=a8O8528/- ismade to the returned income to the assessee.” The CIT(A) and the Tribunal also accepted the aforesaid conclusion whichwas not shown to be erroneous or perverse in any manner. 5.1 In view of the above it is clear that the money was notreceived for the purchase of property and it has been receivedfor maintenance of the family. Further this is not a mode ofreceipt of loan from any person. Section 269SS of IT Act,1961 allows acceptance of any loan of deposit by way ofpayee account cheque or payee account draft only if theamount of such loan or deposit or aggregate amount of suchloan or deposit exceeds“a20000/-. | am not satisfied with theexplanation of the assessee and an addition of=a8O8528/- ismade to the returned income to the assessee.” The CIT(A) and the Tribunal also accepted the aforesaid conclusion whichwas not shown to be erroneous or perverse in any manner. 10,In the light of the aforesaid, the only attempt of the appellantwas to reappraise the evidence and draw a different conclusion which doesnot fall within the domain of Section 260A of the Act. The view taken bythe authorities below is plausible view on appreciation of material on recordand the findings recorded by the Assessing officer, CIT(A) and the Tribunalcannot be faulted. No substantial question of law arises. Consequently, theappeal stands dismissed, (Ajay Kumar Mittal)Judge August 19, 2014 (Fateh Deep Singh)Judge ?/&