Krishan Kumar Jhamb v. Income Tax Officer & Another

Income Tax Appeal No.691 of 2008 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH. Income Tax Appeal No.691 of 2008 (O&M)Date of Decision : 08.12.2008 Krishan Kumar Jhamb ....Appellant Versus Income Tax Officer & another. **** ....Respondents. CORAM:HON'BLE MR.JUSTICE ADARSH KUMAR GOEL. HON'BLE MR.JUSTICE L.N.MITTAL. **** Present:Ms.Aman Bahri, Advocate, foro the appellant. **** Adarsh Kumar Goel, J 1.Delay condoned. 2.The revenue has preferred this appeal under Section 260-A ofthe Income Tax Act against the order dated 18.01.2008 passed by theIncome Tax Appellate Tribunal, Delhi Bench-1, Delhi proposing followingsubstantial questions of law:- a.Whether the revenue has erred in law in relyingupon a valuation report based on CPWD rates for calculatingthe cost of construction of property located in the State ofHaryana? b.Whether on account of non finalization of HPWDrates the CPWD rates would be deemed to be applicable? c.Whether the revenue authorities have erred in law by wrongly treating advances as Cash Credits by applyingSection 68 of the Income Tax Act ? d.Whether the revenue can be permitted to madedouble addition of the same item (Advances in the presentcase) in the assessable income of the assessee ? e.Whether the contradictory findings of the Revenueauthorities can be applied to the prejudice of the appellant ?f.Whether the Revenue Authorities have wronglyinterpreted and applied the Civil Court Judgment ? g.Whether the onus to disclose the source of incomeof the source has to be discharged by the assessee? h.Whether on the facts and circumstances of the casethe Ld. Income Tax Appellate Tribunal was correct in lawand on facts in holding that the value determined by theDepartmental Valuation Officer (DVO), be adopted andignore the valuation report of the approved valuer filed bythe Appellant which report was, infact considered by theAssessing Officer and adopted after making some additions,in view of the judgment Bholanath Majumdar vs. ITO &others reported as (1996) 221 ITR 608 and other similarjudgments ? i.Whether on the facts and circumstances of thecase, the assessing officer was correct in law in referring thematter to the Valuation Officer in the absence of any adversematerial on record even when the valuation report was filedby the assessee/appellant and adopted ? Income Tax Appeal No.691 of 2008 3 j.Whether the order passed by the Income Tax Appellate Tribunal is perverse in facts and in law ? 3.During the assessment for the assessment year 1991-1992, theAssessing Officer did not accept the valuation of property and genuinenessof the cash credits. On appeal, the CIT (A) remanded the matter for freshassessment in the light of report of the Departmental Valuation Officer(DVO). The Assessing Officer made assessment accordingly. Differencebetween the value of the property declared by the assessee and the value ofthe property determined by the DVO was added back. Apart from this, thecash credits were treated to be the income from other sources. On appeal,part of addition was deleted to the extent explanation of assessee was foundto be acceptable. 4.The Tribunal has affirmed the view taken by the appellateAuthority. 5.The Tribunal considered two issues:- (i)addition on account of cost of construction and (ii)addition on account of cash credits. 6.As regards the cost of construction, the Tribunal held as under:- “On the other hand, it is also clear from the orders of theauthorities below that the valuation report of theregistered valuer suffered from grave infirmity, in asmuch as it did not take into account a number of itemsused by the assessee for construction of the property. Insuch circumstances, we do not find any reason to agreewith the learned counsel that it was defective on accountof adoption of CPWD rates.” Income Tax Appeal No.691 of 2008 4 As regards the cash credits, the finding of the Tribunal is as follows:- 4.The Tribunal has affirmed the view taken by the appellateAuthority. 5.The Tribunal considered two issues:- (i)addition on account of cost of construction and (ii)addition on account of cash credits. 6.As regards the cost of construction, the Tribunal held as under:- “On the other hand, it is also clear from the orders of theauthorities below that the valuation report of theregistered valuer suffered from grave infirmity, in asmuch as it did not take into account a number of itemsused by the assessee for construction of the property. Insuch circumstances, we do not find any reason to agreewith the learned counsel that it was defective on accountof adoption of CPWD rates.” Income Tax Appeal No.691 of 2008 4 As regards the cash credits, the finding of the Tribunal is as follows:- “The facts are that the assessee received the impugned amountostensibly from six persons as a consequence of agreements forsale of shops. This fact does not stand proved when affidavitswere filed from some of the persons for the reason that thepersons could not be produced for authenticating theirsignatures and explaining the contents of the affidavits.Similarly, production of agreement to sale, incomplete andunsigned, does not lead to the inference that the monies werereceived in consideration of the agreement to sell. What issurprising is that these persons were not handed over thepossession of the shops and even the money was not returned tothem till date of hearing before us. It will be inconceivable thatall the six persons, after paying substantial monies, did not turnup to take possession of shops and even did not demand themonies back from the assessee. Most of the cases relied uponby the assessee are in regard to raising of share capitals bycompanies, in which courts held that if the real subscriber couldnot be identified, the right course would have been to bring themoney to tax in the hands of the persons to whom the moniesbelonged. In this case, the conduct of the assessee andsurrounding circumstances show that the money belonged tothe assessee as no benefit was passed on to the allegedintending buyers. Then, there are cases to the effect that whilethe assessee is required to prove the source of money, he is not Income Tax Appeal No.691 of 2008 5 required to prove the source of the source. In the instant case,source of the money has not been proved and the learned CIT(A) has not really gone into the source of the source. Thenthere are cases that if the creditors have been identified, themonies have been received by cheques and P.A. numbers havebeen furnished, the addition cannot be made merely because thepersons could not be traced. In the instant case, the monieshave been received in cash and not by way of cheques.” 7.We have heard learned counsel for the assessee and perused theimpugned orders. 8.Questions (a), (b), (h) & (i) cannot be held to be substantialquestions of law, in view of the clear findings that the valuation of theregistered value relied upon by the assessee was not correct. Question (c)also cannot be held to be substantial question of law. Finding of Tribunal inthis regard is not shown to be perverse. Remaining questions areconsequential. 9.No substantial question of law arises for consideration. 10.The appeal is dismissed. 08.12.2008mamta-II (Adarsh Kumar Goel) Judge (L.N.Mittal)Judge