Madan Lal v. Commissioner Of Income Tax And Another

ITA No. 390 of 2005 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 390 of 2005 Date of Decision: 23.2.2011 Madan Lal Versus Commissioner of Income Tax and another ....Appellant. ...Respondents. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Ms. Radhika Suri, Advocate for the appellant. Mr. Rajesh Katoch, Standing Counsel for the respondents. AJAY KUMAR MITTAL, J. 1.Since the Registry has not been able to send the files ofthis case on account of the fire incident in the concerned Branch of theCourt, learned counsel for the revenue has furnished photostat copiesof the paper books which are taken on record and the same are treatedas reconstructed files of the appeal. 2.This appeal has been filed by the assessee under Section260A of the Income Tax Act, 1961 (in short “the Act”) against the orderdated 10.2.2005 passed by the Income Tax Appellate Tribunal,Chandigarh Bench “B”, in ITA No. 786/Chandi/2000, relating to theassessment year 1997-98, claiming the following substantial questions of law:- “i)Whether in facts and circumstances of the case, theorder of the Tribunal is perverse as it is not supportedby any material on record?order of the Tribunal is perverse as it is not supportedby any material on record? ii)Whether in facts and circumstances of the case, theorder of the Tribunal is perverse because theTribunal has ignored vital evidence led by theassessee in which it has been categorically provedthat the assessee had a sum of Rs.1,64,000/- on9.1.1995 and had made further withdrawals on10.3.1995 for purchase of property and therefore itcould not be held that a sum of Rs.1 lac representedundisclosed income of the assessee?order of the Tribunal is perverse because theTribunal has ignored vital evidence led by theassessee in which it has been categorically provedthat the assessee had a sum of Rs.1,64,000/- on9.1.1995 and had made further withdrawals on10.3.1995 for purchase of property and therefore itcould not be held that a sum of Rs.1 lac representedundisclosed income of the assessee? iii)Whether in the facts and circumstances of the case,the order of the Tribunal is perverse as the order ofthe Tribunal is based on conjectures and surmises?”the order of the Tribunal is perverse as the order ofthe Tribunal is based on conjectures and surmises?” 3.Briefly stated, the facts necessary for adjudication asnarrated in the appeal are that the assessee filed his return for theassessment year 1997-98 on 29.10.1997 declaring an income ofRs.19,79,343/- which was subsequently revised to Rs.19,96,228/-. Thecase of the assessee was taken up for scrutiny and the AssessingOfficer made additions on various accounts, as under:- 1.Unexplained cash amountRs.1,00,000/- 2.Car expenses and depreciationRs.1,22,388/- 3.Telephone Expenses Rs.13,000/- 4.Low household withdrawalsRs.72,000/- iii)Whether in the facts and circumstances of the case,the order of the Tribunal is perverse as the order ofthe Tribunal is based on conjectures and surmises?”the order of the Tribunal is perverse as the order ofthe Tribunal is based on conjectures and surmises?” 3.Briefly stated, the facts necessary for adjudication asnarrated in the appeal are that the assessee filed his return for theassessment year 1997-98 on 29.10.1997 declaring an income ofRs.19,79,343/- which was subsequently revised to Rs.19,96,228/-. Thecase of the assessee was taken up for scrutiny and the AssessingOfficer made additions on various accounts, as under:- 1.Unexplained cash amountRs.1,00,000/- 2.Car expenses and depreciationRs.1,22,388/- 3.Telephone Expenses Rs.13,000/- 4.Low household withdrawalsRs.72,000/- 4.Against the aforesaid additions, the assessee filed anappeal before the Commissioner of Income Tax (Appeals) [in short “theCIT(A)”]. The CIT(A) sustained the addition of Rs.1,00,000/- onaccount of unexplained cash amount and modified the additions onaccount of low household expenses from a sum of Rs.72,000/- to a sumof Rs.60,000/- and telephone expenses from Rs.13,000/- toRs.12,000/-. Still feeling aggrieved, the assessee filed an appeal beforethe Tribunal pleading that a sum of Rs.1,00,000/- added asunexplained cash was totally unwarranted as for the assessment year1996-97, the CIT(A) in his order had accepted the factum ofcancellation of sale deed and receipt of the amount of Rs.1,64,000/- bythe assessee on 9.1.1995. Since the order of the CIT(A) had beenaccepted by the revenue for the preceding year as no further appealwas filed challenging the same, the finding of the CIT(A) had attainedfinality. The Tribunal held that since there were withdrawals made bythe assessee on 10.3.1995 and the assessee did not possess cashamounting to Rs.1,64,000/- on the date of the search, i.e., 11.8.1995therefore, cash deposit of Rs.1,00,000/- on 10.4.1996 was undisclosedincome of the assessee. The Tribunal also upheld the disallowance of1/5[th] of car expenses amounting to Rs.44,146/- on account of personaluse of the vehicle and telephone expenses to the extent of Rs.12,000/-.This gave rise to the assessee to approach this Court by way of instantappeal. 5.We have heard learned counsel for the parties. 6.Learned counsel for the assessee submitted that theauthorities below have failed to appreciate the material on record inright perspective and had upheld the addition of Rs.1,00,000/- onconjectures. According to the learned counsel, it was not disbelievedthat the cancellation of the sale deed had taken place on 9.1.1995 and,therefore, the cash was available with the assessee on 10.4.1996. Thewithdrawal of cash from the bank account during the period from9.1.1995 to 10.4.1996 would not make any difference once theavailability of cash was there. 7.On the other hand, controverting the submissionsaforesaid, learned counsel for the revenue submitted that it has beenconcurrently recorded by the authorities below that the source ofRs.1,00,000/- was not explained by the assessee and, therefore, it hasbeen rightly added. 8.After giving thoughtful consideration to the respectivesubmissions made by the learned counsel for the parties, we do not findany merit in the contentions raised by the learned counsel for theassessee. 9.The authorities below have concurrently recorded finding offact that Rs.1,00,000/- introduced in the books of account by theassessee on 10.4.1996 was not out of Rs.1,64,000/- received by him on9.1.1995 on cancellation of sale deed. The findings recorded by theTribunal in paras 9 and 10 while affirming the orders of the AssessingOfficer and the CIT(A), are as under:- “9.Now the next question required to be determined by 8.After giving thoughtful consideration to the respectivesubmissions made by the learned counsel for the parties, we do not findany merit in the contentions raised by the learned counsel for theassessee. 9.The authorities below have concurrently recorded finding offact that Rs.1,00,000/- introduced in the books of account by theassessee on 10.4.1996 was not out of Rs.1,64,000/- received by him on9.1.1995 on cancellation of sale deed. The findings recorded by theTribunal in paras 9 and 10 while affirming the orders of the AssessingOfficer and the CIT(A), are as under:- “9.Now the next question required to be determined by us is that in case the assessee has received this amount ofRs.1,64,000/- on account of the cancellation of the saledeed on 9.1.1995. Whether the impugned amount of Rs.1lakh out of the same was available with the assesseeduring the assessment year 97-98 under consideration.Now according to the assessee he had purchased the landin question on 6.12.1994 and cancelled the deal on9.1.1995 and after cancellation of the same he receivedback the entire investment of Rs.1,64,000/- on 9.1.95.Further, according to him out of this amount, a sum ofRs.64,000/- was utilized for the construction of the wallbefore 11.8.95 and the other amount of Rs.1 lakh remainedwith the assessee which he reintroduced in his books ofaccounts on 10.4.96. On 10.3.95, the assessee haswithdrawn a cash of Rs.1 lakh for the purchase of land asis clear from the photo copy of the withdrawal filled by theassessee before the CIT(A) during appellate proceedings.The assessee also explained before the CIT(A) that thisimpugned amount of Rs.1 lakh was kept by him becausehe intend to purchase some other land and since the samewas not purchased, the amount was ultimatelyreintroduced in the books of accounts. But it is pertinent tomention here that the assessee has made withdrawalsfrom his books on 10.3.95 for a sum of Rs.17,700/- andRs.1,40,000/- when a sum of Rs.1,64,000/- was already available with him from the cancellation of the sale deedbecause the sum of Rs.64,000/- is claimed to have beenutilized by the assessee for construction of the wall before11.8.95. It does not appeal to reason as to when the cashof Rs.1,64,000/- was available with the assessee from thecancellation of the sale deed then what was the necessitywith the assessee for making withdrawals of Rs.17,700/-and Rs.1,40,000/- on 10.3.95. 10.Even before us the assessee has not been able toexplain as to why the assessee withdrew this amount ofRs.17,700/- and Rs.1,40,000/- on 10.3.95 from his booksof accounts when a sum of Rs.1,64,000/- in cash wasalready available with him. It is also important to mentionhere that no part of the amount of Rs.1,64,000/- wasavailable with the assessee on the date of search i.e.11.8.95 when it has been alleged by the assessee that thisamount was kept in cash by the assessee. The non-availability of this cash further gets support from the factthat the assessee has been withdrawing the cash from hisbusiness on 10.3.95 and 15.3.95. In our opinion noprudent person would withdrew further cash for anypurpose for which the alleged available cash was to beutilized when sufficient cash is already available with thatperson. The assessee has also not been able to explainbefore us as to why this amount of Rs.1,64,000/- received by the assessee on 9.1.1995 on account of thecancellation of the sale deed was not introduced in thebooks of accounts by the assessee till 10.4.96 when theassessee was maintaining regular books of accounts.Hence, we are of the opinion that in view of theseinconsistencies as discussed here in above by us, theassessee failed to establish that impugned sum of Rs.1lakh introduced by the assessee in its books on 10.4.96was part of the amount of Rs.1,64,000/- which theassessee has received on account of the cancellation ofthe sale deed on 9.1.95 and so the tax authorities below intheir well reasoned and well discussed order have rightlycome to the conclusion that the amount of Rs.1,00,000/-introduced by the assessee in its books of accounts wasan amount from the undisclosed sources of the assesseeand accordingly the order of CIT(A) in sustaining theimpugned addition of Rs.1 lakh is upheld and the groundNo.1 of the appeal of the assessee is rejected.” 10.The counsel for the assessee was unable to justifywithdrawal made by the assessee on 10.3.1995 in case any part of theamount of Rs.1,64,000/- received on 9.1.1995 on account ofcancellation of sale deed was available with him. Therefore, theexplanation of the assessee that the entry of Rs.1,00,000/- on10.4.1996 was on account of reintroduction of the said amount hadrightly not been accepted. The findings recorded are based on the material on record and the view taken by the authorities below is aplausible one in the facts and circumstances of the case. 11.In view of the above, there is no merit in this appeal and the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE February 23, 2011gbs (ADARSH KUMAR GOEL)JUDGE