Ita/395/2014 Of Surjit Singh v. Commissioner Of Income Tax Bathinda

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 395 of 2014 (O & M)Date of Decision:- 21.07.2015 Surjit Singh ......Appellant(s) G.S.SANDHAWALIA, J. The present appeal is directed against the judgment of the Income TaxAppellate Tribunal, Amritsar whereby, the appeal of the assessee was only partlyallowed and the disallowance of `7,23,000/- was upheld in place of the addition madeby the Assessing Officer of `9,02,215/-. The matter pertains to the assessment year2004-05. The question of law which arises for consideration is:- “Whether the order of the Tribunal suffers from any perversityand whether it is sustainable in view of the peculiar facts andcircumstances keeping in view the ownership of the agricultural landin the hands of the appellant.” The appellant-assessee filed his return of income on 07.05.2004 wherein, asum of `40,670/- was declared as income apart from agricultural income to the tune of`7,00,000/-. The returned income was accepted on 13.02.2006. Subsequently, onaccount of the cash deposits of `7,23,000/- in the savings account of the assessee, theSHIVANI GUPTA2015.08.03 10:32I attest to the accuracy andintegrity of this documentsource of the said cash deposit was sought to be explained by the revenue. TheChandigarh explanation of the assessee was that he was owner of 20 acres and 7 kanals ofagricultural land in his own name and out of which, there was an orchard of 8 acres,which was being cultivated. The sale proceeds of fruit of `9,02,215/- had beendeposited and one M/s. Gurdaspurian Di Hatti Food, an Commission Agent of Batalahad made the payments. The concerned assessing authority at Abohar accordingly wroteto his counter part at Batala regarding the payment made in cash by the said commissionagent. The original receipts forwarded by the assessee were also sent to the said incometax officer at Batala for taking suitable action against the said commission agent. Areport was also received that the said transactions were not recorded in the accountbooks of the said commission agent. However, on the non-confirmation of the sales from the commission agent,the liability was fastened upon the assessee by issuing notice under Section 148 of theIncome Tax Act, 1961 (in short 'the Act') by rejecting the plea of the assessee that thedepartment should have proceeded against the commission agent. The challenge to thereopening of the case and that the fact that even subsequently the assessee was showingagricultural income from the land which he owned was accordingly rejected on accountof the fact that the amount had been deposited in the month of February, 2004 and it washeld to be undisclosed income. The factum of the assessee having retired 16 yearsearlier was also to be held against him by holding that he had tried to include his pastsavings and unaccounted money in agricultural income apart from levying penaltyproceedings separately vide order dated 26.10.2011. The appeal of the assessee was also dismissed by the Commissioner ofIncome Tax on 22.05.2013 on the ground that he had not been able to furnish anyconcrete evidence regarding the transactions noted on the letter pad of the commissionagent and whether the same were true and correct since the said firm had denied havingpurchased any fruit from the appellant. The addition was thus, upheld by holding thatthe source of cash deposits had not been discharged by producing any positive evidence. The appeal of the assessee was also dismissed by the Commissioner ofIncome Tax on 22.05.2013 on the ground that he had not been able to furnish anyconcrete evidence regarding the transactions noted on the letter pad of the commissionagent and whether the same were true and correct since the said firm had denied havingpurchased any fruit from the appellant. The addition was thus, upheld by holding thatthe source of cash deposits had not been discharged by producing any positive evidence. In the appeal before the Tribunal, challenge was raised to the notice dated10.02.2011 under Section 148 of the Act and the addition made on this basis. It waspleaded that no opportunity had been given to the assessee to cross examine thestatement of the partner of the commission agent. The Tribunal held that the initialassessment on 13.02.2006 was in a summary manner and once the Assessing Officer hadcome to know that the deposits were ingenuine, the agricultural income was treated asnon-agricultural income and added to the income of the assessee. The Tribunal came toSHIVANI GUPTA2015.08.03 10:32I attest to the accuracy andthe conclusion that the revenue record did not depict that the assessee was the exclusiveintegrity of this documentChandigarh owner of the agricultural land and rejected the submission that for subsequent 3 years inthe returns filed, agricultural income had been shown and which had been acceptedranging from `1,00,000/- to `12,50,000/- by holding that each year is an independentyear. The facts have been noticed in detail above. It is a matter of record thatinitially, the returns were accepted and an inquiry was initiated against the commissionagent for making cash payments. The original receipts had also been furnished by theassessee who was situated at Abohar and the commission agent was based in districtGurdaspur. The reopening thus, on the strength of the denial by the commission agent,was without giving any proper opportunity and a proper inquiry should have been madeas to how original receipts and letter pads of the said commission agent had found theirway in the hands of the assessee who was situated at the other end of the State fromwhere the commission agent was located. The factum of the assessee owning 20 acresand 7 kanals of agricultural land was never in doubt and a specific plea right from dayone was that out of the said land, 8 acres was dedicated to an orchard. In such circumstances, the onus of proof was wrongly put upon theassessee mainly because of cash deposits of `7,23,000/-, which have been now added tohis income as income from undisclosed sources. The assessee was never given a properopportunity to cross examine or rebut the stand of the commission agent who was at thatpoint of time was on the receiving end of the department since an inquiry was beingmade against him as to how he had made cash payments of such huge amount which hadnot been reflected in the account books. The order of the Tribunal thus suffers frompatent perversity by not taking into account the cumulative factors which are in favourof the assessee and by confirming the additions made against the assessee and acceptingthe statement of the commission agent as gospel truth. Merely because the appellantwas a retired employee and filed his return showing agricultural income admittedlybeing a owner of agricultural land, the assessing officer was not justified in making theadditions on the assumption that the assessee had tried to include his past savings andunaccounted money in the agricultural income. The said finding was totally conjecturaland without any basis which further was wrongly upheld by the Commissioner ofIncome Tax and only partial relief was granted by the Tribunal. Accordingly, keeping in view the above discussion, the question of lawframed above is answered in favour of the appellant. The appeal is allowed and the addition of `7,23,000/- sustained by the Tribunal on account of income from undisclosedsources is set aside. (S.J. VAZIFDAR) ACTING CHIEF JUSTICE Accordingly, keeping in view the above discussion, the question of lawframed above is answered in favour of the appellant. The appeal is allowed and the addition of `7,23,000/- sustained by the Tribunal on account of income from undisclosedsources is set aside. (S.J. VAZIFDAR) ACTING CHIEF JUSTICE (G.S. SANDHAWALIA)JUDGE 21.07.2015shivani