Lajpat Rai v. Commissioner Of Income Taxpatiala

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ---- Income Tax Appeal No. 977 of 2008Date of decision: 8.11.2010 Lajpat Rai --- Appellant Versus Commissioner of Income taxPatiala --- Respondent CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL ---- PRESENT:Mr. Pankaj Jain, Advocate for the appellant. Mr. Yogesh Putney, Central Govt. Standingcounsel for the respondent-Revenue. ---- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-tax Act,1961 (for short “the Act’”) has been filed by the assessee against theorder dated 31.10.2007, passed by the Income Tax AppellateTribunal, Chandigarh Bench “A”, Chandigarh (in short “the Tribunal”)in ITA (SS) No. 36/CHANDI/2001, relating to block period 1.4.1988 to22.9.1998 The assessee has claimed the following substantialquestions of law for determination by this Court: 1-Whether the Tribunal order is sustainable in making theaddition of Rs. 3,50,000/- on account of investment inIndira Vikas Patra and Kisan Vikas Patra when no suchIVPs and KVPs were found during the course of searchand without proving any corresponding income?addition of Rs. 3,50,000/- on account of investment inIndira Vikas Patra and Kisan Vikas Patra when no suchIVPs and KVPs were found during the course of searchand without proving any corresponding income? Whether the assessee be granted the benefit oftelescoping of the additions sustained in the unexplainedincome?telescoping of the additions sustained in the unexplainedincome? 2- In brief, the facts necessary for adjudication as narratedin the appeal are that the assessee is engaged in the business ofcommission agency and having the interest limited to the extent ofcommission only. On 22.9.1998, a search operation was carried onthe residential and business premises of the assessee under Section132(1) of the Act, and pursuant thereto a notice under Section158BC was served on him. Assessment was framed vide orderdated 29.9.2000, Annexure A-1, wherein the assessing authorityworked out the undisclosed income at Rs. 54,71,306/- and madeadditions on various counts, but the assessee disputed only theaddition made on account of estimation of income from Kisan VikasPatras for the assessment years 1997-98, 1998-99, 1999-2000 (up to22.9.1998) and regarding the adhoc addition of Rs. 3,50,000/- .Aggrieved by the order, Annexure A-1, the assessee filed appealbefore the Commissioner of Income Tax (Appeals), [hereinafterreferred to as “the CIT(A)”]. The CIT(A) on appeal carried by theassessee observed that the assessee had failed to explain thesource of the investment, confirmed the addition of Rs. 3,50,000/- as against the addition of Rs. 17,00,000/- made by the assessing officer,vide order dated 27.3.2001, Annexure A-2. The assessee still dissatisfied assailed the order of theCIT(A) before the Tribunal. The Tribunal dismissed the appealagainst the order of the CIT(A), vide order under appeal. We have heard learned counsel for the parties andperused the record. The only point that arises for consideration in the appeal relates to addition of Rs. 3,50,000/- made on account of investmentin Indira Vikas Patras and Kisan Vikas Patras. The CIT(A) while sustaining the addition of Rs. 3,50,000/-as unexplained investment in these instruments had in para 7.3 of itsorder observed as under: against the addition of Rs. 17,00,000/- made by the assessing officer,vide order dated 27.3.2001, Annexure A-2. The assessee still dissatisfied assailed the order of theCIT(A) before the Tribunal. The Tribunal dismissed the appealagainst the order of the CIT(A), vide order under appeal. We have heard learned counsel for the parties andperused the record. The only point that arises for consideration in the appeal relates to addition of Rs. 3,50,000/- made on account of investmentin Indira Vikas Patras and Kisan Vikas Patras. The CIT(A) while sustaining the addition of Rs. 3,50,000/-as unexplained investment in these instruments had in para 7.3 of itsorder observed as under: “7.3 Regarding the transactions which were purchased bythe assessee’s agriculturist clients by withdrawing moneyfrom assessee’s books of account, the Assessing Officerhas absolutely no case as he did not bring absolutelyanything to hang on his conclusion that it was actually theassessee to whom this investment actually belonged.For one thing, the I.T. Department was not able to findthese IVPs in the possession of the assessee during thesearch operations although the I.T. Department was alsonot able to find even those IVPs worth Rs. 5,00,000/-where even the assessee’s books of account showed theinvestment. Secondly, various agriculturists clients of theassessee had exact withdrawals on the same dates fromassessee’s books of account including even the seized books of account. Thirdly, they owned up these IVPs andthe Assessing Officer could not bring anything on recordto doubt their claim in the statements recorded by him.Under the circumstances, the additions made by theAssessing Officer in regard to the investments in theseIVPs/ KVPs where the assessee could show to whom theinvestment actually belonged are deleted. However, inregard to following investments, the assessee has notbeen able to give any explanation. The assessee here cannot claim that the addition hasbeen made on the basis of a paper which gives no detailsbecause the details given in the paper have beenauthenticated by his explanation in regard to othertransactions. The assessee also cannot claim that theseKVPs were not discovered during the search at thepremises of the assessee because the I.T. Departmentcould not find even the KVPs worth Rs. 5,00,000/- whichare shown to have been purchased even as perassessee's own books of account because assessee’sbooks of account show investments worth Rs.12,50,000/- in the purchase of IVPs and KVPs whereas during the search IVPs worth 5,50,000/- and KVPs worth Rs. 2,50,000/- only were discovered. Under thecircumstances for the failure of the assessee to explainthe source of these investments, the addition of Rs.3,50,000/- out of total of Rs. 17,00,000/- made by theAssessing Officer is confirmed. The Assessing Officer isalso directed to restrict the addition worked out by him onaccount of interest earned on these undisclosedinvestments of Rs. 3,50,000/-.” The aforesaid findings were affirmed by the Tribunal vide order under appeal. The findings of the Tribunal read thus: “Now in-so-far as the addition of Rs. 3.50 lacs sustainedby the Ld. CIT(A) is concerned, herein also we aresatisfied that the order of Ld. CIT(A) is fair and proper.The Ld. CIT(A) as is evident from the perusal of para 7.3of his order, had concluded that no explanation has beenfurnished by the assessee on this aspect. The findingsand the reasoning recorded by the Ld. CIT(A) which wehave extracted in the earlier part of this order, in our vieware reasonable and deserve to be confirmed. We herebyconfirm the same. The assessee, therefore, fails on itsground.” The aforesaid findings were affirmed by the Tribunal vide order under appeal. The findings of the Tribunal read thus: “Now in-so-far as the addition of Rs. 3.50 lacs sustainedby the Ld. CIT(A) is concerned, herein also we aresatisfied that the order of Ld. CIT(A) is fair and proper.The Ld. CIT(A) as is evident from the perusal of para 7.3of his order, had concluded that no explanation has beenfurnished by the assessee on this aspect. The findingsand the reasoning recorded by the Ld. CIT(A) which wehave extracted in the earlier part of this order, in our vieware reasonable and deserve to be confirmed. We herebyconfirm the same. The assessee, therefore, fails on itsground.” Learned counsel for the assessee was unable to point outthat the findings concurrently recorded by the CIT(A) and the Tribunalwhile sustaining the addition of Rs. 3,50,000/- was erroneous orperverse in any manner. Only an effort was made by the counsel forre-appreciation of evidence by this Court which is not within the ambit of Section 260A of the Act. It is evident from the record that theassessee was not able to furnish any explanation for investmentsunder reference and, therefore, the appellate authorities below took aplausible view in the matter and sustained the addition of theaforesaid amount. . In view of the above no substantial question of law arises in this appeal. Accordingly, finding no merit in the appeal, the sameis dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) November 8, 2010 JUDGE*rkmalik*