Ita/84/2016 Of Jasbir Singh v. Commissioner Of Income Tax Patiala

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.84 of 2016 (O&M)Date of decision: 11.4.201 Jasbir Singh, Prop. M/s Jasbir Singh Gurcharan Singh, New GrainMarket, Patiala, Punjab 147001. .....- Appel Commissioner of Income Tax, Patiala and another ....AmeSsponde CORAM: HON BLE MR. JUSTICK AJAY KUMAR MITTALHON BLE MRS. JUSTICEK RAJ RAHUL GARG 1. Whether Reporters of local papers may be allowed to see the judgment?2. To be referred to the Reporters or not?YES3. Whether the judgment should be reported in the Digest? Present: Mr. Salil Kapoor, Advocate with|Mr. Rishabh Kapoor, Mr. Saurabh Kapoor,Mr. Puneet Aggarwal, Ms. Annanya Kapoor andMr. Sumit Lal Chadha, Advocates for the petitioner. 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 30.9.2015, Annexure P.4 passed by the Income Tax AppellateTribunal, Chandigarh Bench, Chandigarh (in short, “the Tribunal’) underSection 254(1) of the Act in ITA No.72/Chd/2011, upholding penalty undersection 271(1)(c) of the Act, for the assessment year 2006-07, claimingfollowing substantial questions of law:- 1. Whether in view of the facts and circumstances of the case the Tribunal has erred in law and on facts in upholding theorder of the Assessing Officer of imposing the penalty undersection 271(1)(c) of the Act? 2. Whether in the facts and in the circumstances of the case,the Tribunal was correct in law in not admitting the evidenceunder Rule 29 of the Income tax Appellate Tribunal Rules1963 being vital piece of evidence and have bearing over thefact in 1Ssue?the Tribunal was correct in law in not admitting the evidenceunder Rule 29 of the Income tax Appellate Tribunal Rules1963 being vital piece of evidence and have bearing over thefact in 1Ssue? 3. Whether the Tribunal has erred in ignoring the varioujudicial record, orders and copy of complaints which clearlyreflects the liability of the creditors?judicial record, orders and copy of complaints which clearlyreflects the liability of the creditors? 4. Whether on the facts and in the circumstances of the case,the findings arrived at by the Tribunal are perverse, in asmuch as no reasonable person correctly informed of theprovisions of law would come to such a conclusion?the findings arrived at by the Tribunal are perverse, in asmuch as no reasonable person correctly informed of theprovisions of law would come to such a conclusion? 5. Whether the Tribunal has erred in law by wrongly applyingthe decision of the Hon'ble Supreme Court in the case ofMac Data 358 ITR 593 (SC) which is distinguishable onfacts and not universally applicable?”the decision of the Hon'ble Supreme Court in the case ofMac Data 358 ITR 593 (SC) which is distinguishable onfacts and not universally applicable?” 2A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The appellant-assessee 1sproprietor of M/s Jasbir Singh Gurcharan Singh. He is in the business ofcommission agent (Kacha Ahrtia) at Anaj Mandi, Patiala. The appellantfacilitates the local farmers in selling the agriculture produce and in returncharges commission on the same. He advances loans to the farmers andsometimes borrows the same for the business activity. The appellant filedhis return of Income under section 139 of the Act which was processed ITA No.84 of 2016 (O&M) 2A few facts relevant for the decision of the controversyinvolved as narrated in the appeal may be noticed. The appellant-assessee 1sproprietor of M/s Jasbir Singh Gurcharan Singh. He is in the business ofcommission agent (Kacha Ahrtia) at Anaj Mandi, Patiala. The appellantfacilitates the local farmers in selling the agriculture produce and in returncharges commission on the same. He advances loans to the farmers andsometimes borrows the same for the business activity. The appellant filedhis return of Income under section 139 of the Act which was processed ITA No.84 of 2016 (O&M) under section 143(1) of the Act. The case of the assessee was selected forscrutiny. Notice under sections 142(1) and 143(2) of the Act was issued tothe appellant. The appellant supplied all the necessary financial statementsand produced books of account before the respondent authorities. Duringthe assessment proceedings, the Assessing Officer asked the appellant to fileconfirmation qua certain sundry creditors outstanding as on 31.3.2006. Theappellant submitted confirmation of five creditors out of nine. The appellantwas not in good relations with the creditors and therefore they refused tosign the confirmations. The Assessing Officer vide order dated 22.12.2008,Annexure A.| made addition under Section 68 of the Act amounting to=5,24,000/-. The respondent also initiated penalty proceedings under section271(1)(c) of the Act vide letter dated 3.6.2009. The appellant appearedbefore the respondent and submitted that for the last few years, he was notmaintaining good relations with the creditors and therefore they refused tosign the confirmations. The Assessing Officer imposed penalty amountingTO =a1,42,942/- vide order dated 26.9.2009, Annexure A.2. The appellantchallenged the said order before the Commissioner of Income Tax(Appeals) [CIT(A)]. Vide order dated 19.10.2010, Annexure P.3, theCIT(A) dismissed the appeal and upheld the order passed by the AssessingOfficer. Aggrieved by the order, the assessee filed appeal before theTribunal. The appellant also filed an application dated 14.6.2011 under Rule29 of the Income Tax (Appellate Tribunal) Rules, 1963 (in short, “theRules’) for submitting certain documents as additional evidence.According to the appellant, he could not produce the evidence earlerbefore the Assessing Officer and the CIT(A) since he was 1n jail on account ITA No.84 of 2016 (O&M) of various criminal proceedings pending against him. Vide order dated30.9.2015, Annexure P.4, the Tribunal dismissed the appeal of the appellantand upheld the order passed by the CIT(A). The additional evidence wasalso not held to be relevant. Hence the instant appeal by the appellant-aSSCSSCCE. 3)We have heard learned counsel for the appellant. 4Learned counsel for the appellant submitted that the Tribunalerred in not considering the additional evidence produced by the appellant.It was further submitted that even on merits, the findings recorded by theTribunal are erroneous. 4 On perusal of the order passed by the Tribunal, we find that ithas been categorically recorded by the Tribunal that the assessment orderwas passed on 22.12.2008. Some of the documents sought to be producedwere prior to the passing of the assessment order. No explanation had beengiven why the same had not been filed earlier before the authorities below,No proof had been produced regarding the custody of the assessee in jail fornot filing the documents before the authorities below. Even the applicationfor admission of additional evidence had been filed on 14.6.2011 1.e. afterthree years of the passing of the assessment order. After considering theentire material on record and the case law on the point, the Tribunaldeclined to admit the additional evidence produced by the appellant. Furtherthe amount in question 1.e. =a5,24,000/- pertaining to four of the creditorsremained unexplained, false and bogus in the books of account of theassessee. The addition was made when the assessee was cornered by theAssessing Officer to explain the genuineness of the credit that he had surrendered the amount of|5,24,000/- during assessment proceedings. Itwas recorded that the assessee failed to explain the genuine credits/liabilityin the books of account and furnished inaccurate particulars of income so asto invite levy of the penalty. The relevant findings recorded by the Tribunalread thus:- corWe have heard learned representatives of both the parties,perused the material available on record and considered thefindings of the authorities below. The assessee has filedapplication under rule 29 of the ITAT Rules for admission ofthe additional evidences. The same are order of the Hon'blePunjab and Haryana High Court suspending the sentence ofthe assessee in case of Harkewal Singh dated 21.2.2011,Compromise deed with the same person dated 5.9.21007,order dated 2.3.2010 of Additional Sessions Judge in the caseof assessee and Babu Ram Gopal, copy of appeal in this casedated 22.8.2008, complaint filed by Shri Bihari Lal undersection 138 of NI Act dated 18.10.2005 and copy of the orderdated 31.5.2010 of Additional Sessions Judge in the case ofthe assessee and Bag Singh. The learned counsel for theassessee submitted that since assessee was 1n jail for sometime, therefore, these documents could not be filed. Therefore,same may be admitted for hearing. He has also relied upondecision of Delhi High Court in the case ofCIT vs. TestHundred India (P) Limited41 DTR 251 in which It was heldthat ““Tribunal can admit additional evidence on thapplication of one of the parties, if it 1s of the opinion thatdoing so would be necessary for proper adjudication of thematter and that such party was prevented by sufficient causefrom leading such an evidence before the lower authorities”.The learned DR, however, strongly objected to the admissionoft the additional evidence and submitted that no reasons havbeen explained why same were not filed before the authorities below and that for proving genuine credits, it 1s well settledlaw that assessee shall have to prove identity of the creditor,their credit worthiness and genuineness of the transaction inthe matter. Since assessee failed to file even the confirmationform these parties, therefore, these documents now sought tobe admitted, are not relevant to the matter in issue andtherefore, same may be rejected. S.After reconsidering rival submissions, we do not find any’Justification to admit the above additional evidences filed bythe assessee. The Assessing Officer passed the assessmentorder on 22.12.2008. Some of the documents sought to beadmitted are prior to passing of the assessment order as notedabove. No reasons have been explained why the same werenot filed before the authorities below. The learned counsel forthe assessee merely explained that during some periodassessee was 1n jail. Therefore, documents could not be filed,however, no specific averments have been proved having anyconnection with custody of the assessee in jail and for notfiling the documents before the authorities below. Further,learned counsel for the assessee has failed to prove as to what1s the relevance of these additional evidences with the matterIn issue involved in the present appeal. It is well settled lawthat the burden 1s upon assessee to prove the nature andsource of the sundry creditors appearing in the books ofaccount of the assessee. The assessee shall have to proveidentity, credit worthiness and genuineness of the transactionsin the matter. The assessee has not produced any confirmationor evidence before the Assessing Officer to prove all the threeconditions and has virtually vide letter dated 22.12.2008 (PB-23) agreed to surrender the amount of|v5,24,000/- for thepurpose of taxation and to pay the tax. This letter is signed byassessee. The theory of assessee in jail at assessment stage 1sfalse. Thus, the crux of the matter would be that the amount i question 1.e.v5,24,000/- pertaining to four of the creditorsremained unexplained, false and bogus in the books ofaccount of the assessee. The assessee has failed to explain asto how the documents now sought to be admitted pertain tothe matter in issue or have any relevance to the matter inissue. No reasons have also been explained why the samewere not filed before the authorities below despite some of thedocuments are prior to passing of the assessment order. Eventhe application for admission of additional evidence has beenfiled in the paper book dated 14.6.23011 1.e. after three yearsof passing of the assessment order. The Hon'ble Punjab andHaryana High Court in the case of Jawahar Lal Jain, HUF vs,CIT 370 ITR 712 held that “No satisfactory explanation hadbeen furnished to demonstrate why the material sought to beproduced now could not be produced earlier. Therefore,Tribunal was justified in rejecting the application foradmission of additional evidence filed by the assessee.” 9 to 12.AXAAAAAXKX 13.We had considered rival submissions. The Assessing Officerasked the assessee to furnish confirmations in respect ofsundry creditors outstanding in the books of account of theassessee. The case was adjourned to 17.12.2008 and on thisdate, assessee has not filed the confirmations of the above fourcreditors and the matter was, therefore, adjourned by theAssessing Officer to 22.12.2008. On 22.12.2008, the counselor assessee has shown his inability to furnish the confirmationof these four creditors. The copy of the surrender letter is filedat page 23 of the paper book 1n which the assessee agreed toinclude the amount of<a5,24,000/- 1n his income and to paythe tax on the same. The addition was, therefore, made onagreed basis when assessee was cornered by the AssessingOfficer to explain the genuineness of the credit in the matterand assessee failed to prove genuine credit/liability in books ofasked the assessee to furnish confirmations in respect ofsundry creditors outstanding in the books of account of theassessee. The case was adjourned to 17.12.2008 and on thisdate, assessee has not filed the confirmations of the above fourcreditors and the matter was, therefore, adjourned by theAssessing Officer to 22.12.2008. On 22.12.2008, the counselor assessee has shown his inability to furnish the confirmationof these four creditors. The copy of the surrender letter is filedat page 23 of the paper book 1n which the assessee agreed toinclude the amount of<a5,24,000/- 1n his income and to paythe tax on the same. The addition was, therefore, made onagreed basis when assessee was cornered by the AssessingOfficer to explain the genuineness of the credit in the matterand assessee failed to prove genuine credit/liability in books of account. There 1s no question of assessee surrendering theamount in question voluntarily. In the present case, at theassessment stage as well as at the penalty proceedings, theassessee has failed to explain the genuineness of the credits inthe matter. Whatever explanation was filed, was _ nosubstantiated through any evidence or material on record.Thus, assessee failed to explain the genuine credits/liability inbooks of account on the matter in issue and has therefore,furnished inaccurate particulars of income so as to invite levyof the penalty.” 6]The view adopted by the Tribunal 1s a plausible view based on|appreciation of material on record and, therefore, does not warrant anyinterference by this Court. Learned counsel for the appellant-assessee has|not been able to show any illegality or perversity in the impugned order. Nosubstantial question of law arises. Consequently, the appeal standsdismissed. (Ajay Kumar Mittal)Judge April 11, 2016 H,&: (Raj Rahul Garg)Judge