Jatinder Pal Singh Dua v. Commissioner Of Income Tax-I, Jalandhar

ITA No. 448 of 2006 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 448 of 2006 Date of Decision: 3.12.2010 Jatinder Pal Singh Dua Versus Commissioner of Income Tax-I, Jalandhar ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. G.R. Sethi, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.This appeal was admitted by this Court vide order dated19.2.2007 for determination of the following substantial question of law:-“Whether on the facts and in the circumstances ofthe case was there any material and legal basis tohold the explanation of the assessee under Section69 of the Income Tax Act, 1961, not satisfactorywhen the availability of the cash amount with theproprietary business, namely, Dua Plastic Industries,was not disputed and cash withdrawals of Rs.1.5 lacsfrom Punjab and Sind Bank, New Grain Market,Jalandhar, much prior to the filing of the return wasnot questioned and whether the findings were perverse?” 2.Briefly stated the facts for adjudication as narrated in theappeal are that the assessee filed his return on 29.10.2001 for theassessment year 2001-02 declaring an income of Rs.85,825/- alongwith Trading-cum-Profit and Loss Account and balance sheet andcapital account with the Dua Plastic Industries. The assesseepurchased a plot for Rs.4.50 lacs vide agreement dated 19.6.2000. Thesaid amount was invested from the cash balance of business of DuaPlastic Industries by putting a dasti slip in the cash box and recoupedthe said amount by withdrawing Rs.1.5 lacs from Account No.6423 withPunjab and Sind Bank, Jalandhar. The Assessing Officer made anaddition of Rs.1.5 lacs as investment from undisclosed sources.Feeling aggrieved, the assessee filed an appeal before theCommissioner of Income Tax (Appeals) [in short “the CIT(A)”] who videorder dated 18.3.2005 affirmed the said addition of Rs.1.5 lacs. Onfurther appeal, the Tribunal vide order dated 17.2.2006 upheld the viewof the Assessing Officer as well as the CIT (A). Hence, the presentappeal by the assessee. 3.We have heard learned counsel for the assessee. 4.Learned counsel for the assessee-appellant submitted thatthe provisions of Section 69 of the Act had not been complied with and,therefore, the addition could not be sustained on that account. Heargued that there should have been independent finding and noconclusion should have been drawn only on the basis of missing entriesin the books of accounts. The finding recorded by the authoritiesthough concurrent are vitiated as the same are based on violation of the ITA No. 448 of 2006-3- aforesaid legal plea. He placed reliance upon the judgments of theHon'ble Supreme Court in Roshan Di Hatti v. Commissioner ofIncome Tax, Delhi, [1977] 107 ITR 938, Commissioner of Income-Tax v. Smt. P.K. Noorjahan [1999] 237 ITR 570 and of the GujaratHigh Court in Mitesh Rolling Mills P. Ltd. v. Commissioner ofIncome-Tax, [2002] 258 ITR 278. 5.We have given our thoughtful consideration to thesubmission made by the learned counsel for the assessee and are notimpressed with the same. 6.Ordinarily, if a person makes an investment during thefinancial year, it must be either from his current income or his savingsfrom earlier income or through loan or otherwise receipt from someother person. Section 69 of the Act creates a fiction whereby if suchperson does not advance any reasonable explanation for the source ofinvestment which can be accepted, the only conclusion that can bedrawn is that the amount in question has been earned in the saidfinancial year. 5.We have given our thoughtful consideration to thesubmission made by the learned counsel for the assessee and are notimpressed with the same. 6.Ordinarily, if a person makes an investment during thefinancial year, it must be either from his current income or his savingsfrom earlier income or through loan or otherwise receipt from someother person. Section 69 of the Act creates a fiction whereby if suchperson does not advance any reasonable explanation for the source ofinvestment which can be accepted, the only conclusion that can bedrawn is that the amount in question has been earned in the saidfinancial year. 7.It is well settled that wherever a receipt is sought to betaxed as income, the Department is required to prove that the samefalls within the taxing provision, and where the receipt is in the nature ofan income, the burden lies on the assessee to show that it is not taxableas it falls within the purview of exemption provided by the Act.However, under Section 69 of the Act, where the source of investmentis not satisfactorily explained by the assessee, the Assessing Officermay treat the amount of investment as the income of the assessee.The Assessing Officer is empowered to exercise such discretion judiciously keeping in view the facts and circumstances of eachparticular case. 8.Applying the aforesaid principles to the facts of the presentcase, it may be noticed that the assessee had shown an investment ofRs.1,50,000/- on 19.6.2000 by way of a bank draft for the purchase ofplot. There was no material to substantiate that the said amount wasfrom declared sources. The solitary explanation offered by theassessee was that an amount of Rs.1,50,000/- was available with M/sDua Plastics Industries on 19.6.2000 from where he had taken theamount after putting a “Note of Paper slip” showing withdrawal ofRs.1,50,000/- from the said firm. However, no entry was made andlater on Rs.1,50,000/- was withdrawn by him from the bank account on19.10.2000, i.e. after expiry of 4 months period from the date of draftgiven for purchase of plot on 19.6.2000 and paid back to the firm. Theassessee could not substantiate this stand as there was no entry in thebooks of account of M/s Dua Plastic Industries showing advancing ofsuch amount to the assessee on 19.6.2000. The mere availability ofcash with M/s Dua Plastic Industries without any entry regardingwithdrawal of Rs.1,50,000/- in the books of accounts does not help theassessee. In the absence of an entry in the books of accounts of DuaPlastics Industries on 19.6.2000 regarding withdrawal of Rs.1,50,000/-by the assessee, the only inference that can be drawn is that theassessee as an after though has sought to tender a strange explanationwithout any legal justification. 9.The Tribunal while affirming the findings of the AssessingOfficer and CIT(A) had noticed as under:- 9.The Tribunal while affirming the findings of the AssessingOfficer and CIT(A) had noticed as under:- “8.4. I have heard both the parties and carefullyconsidered the rival submissions with reference to facts,evidence and material on record. There is no dispute aboutthe fact that the plot was purchased on 19.06.2000 and thepayment was made on the same day through a bank draft.The assessee has no explanation to support his contentionthat the amount of Rs.1.50 lac was withdrawn from theproprietary concern. If this was the case, nothingprevented the assessee in making entry in the books ofaccount. Thus, the contention of the assessee is notsupported by any evidence. Moreover, the amount ofRs.1.50 lacs was withdrawn from the bank account on19.10.2000 i.e. after a period of 4 months from the datewhen payment was made for purchase of plot. Again thereis no entry in the books of account showing return of suchamount. Therefore, in the absence of any evidencesubmitted before the authorities below or even before theundersigned, I am of the opinion that the learned CIT(A)was justified in sustaining the impugned addition. Asregards the decision of the ITAT, Amritsar Bench, Amritsar,in the case of M/s Tirath Automobiles Vs. ITO (supra), thesame is distinguishable on facts. In that case the assesseehad purchased two bank drafts of 22[nd] May, 1987 and 12[th]March, 1989 and there was sufficient cash available in thebooks of account of the assessee. However, entries in thecash book were made on the next date i.e. 23[rd] May, 1987 and 13[th] March, 1989 respectively. Therefore, the Tribunalheld that the delay of one day in making an entry in thebooks of account when there was sufficient cash availablewould not justify any addition on this account. But in thepresent case, no entry has been made in the books ofaccount either on the withdrawal or on refund of Rs.1.50lac. Therefore, this decision is not applicable to the facts ofthe present case. Thus, the order of the CIT (A) is upheldand this ground of appeal is dismissed.” 10.The finding of fact has not been shown to be perverse. Itcould not be demonstrated that the approach of the Assessing Officer,affirmed by the CIT (A) and the Tribunal, is erroneous or perverse inany manner. 11.Reference is now made to judgments relied upon by thelearned counsel for the assessee. The principles of law enunciated inthese judgments are well recognized. However, they do not advancethe case of the assessee as in the present case, no satisfactoryexplanation has been offered by the assessee to explain the source ofRs.1,50,000/- used in the preparation of draft on 19.6.2000 for thepurchase of plot and the same had been rightly treated as unexplainedinvestment of the assessee under Section 69 of the Act during theassessment year in question. All the three authorities below afterappreciation of the material on record have come to the conclusion thatthe transaction was never recorded in the books of accounts and theassessee was not able to furnish any satisfactory explanation to showthat the demand draft for Rs.1,50,000/- prepared on 19.6.2000 was ITA No. 448 of 2006 from disclosed sources. 12.In view of the above, the substantial question of law isanswered against the assessee. The appeal is accordingly dismissed. (AJAY KUMAR MITTAL) JUDGE December 3, 2010gbs (ADARSH KUMAR GOEL)JUDGE