M/S. Aggarwal Financers, Ladwa v. Commissioner Of Income Tax, Karnaland Another

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 64 of 2010Date of decision: 19.4.2011 M/s. Aggarwal Financers, Ladwa through its partner, Rajinder Pal Gupta --- Appellant Versus Commissioner of Income Tax, Karnaland another --- Respondents CORAM:HON’BLE MR. JUSTICE ADARSH KUMAR GOELHON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present:Mr. Sandeep Goyal, Advocatefor the appellant. Mr. Yogesh Putney, Senior Standing Counselfor the respondent. --- AJAY KUMAR MITTAL, J. 1. This appeal under Section 260A of the Income-Tax Act,1961 (for short “the Act”) has been filed by the appellant-assesseeagainst the order dated 3.12.2008 passed by the Income TaxAppellate Tribunal Chandigarh Bench (SMC Bench) Chandigarh (inshort “the Tribunal”) in ITA No. 103/Chandi/2003, relating to theassessment year 1998-99. 2.The following substantial questions of law have been claimed for determination of this Court: “ (i)Whether in the facts and circumstances of present case, (ii) (iii) (iv) (v) the action of the authorities below in rejecting theadvances of Rs. 1,97,000/- made to the appellant-assessee by the creditors, is legally sustainable in theeyes of law, even when appropriate explanation withregard to the same being legal was aptly provided to theAssessing Officer? Whether under the facts and circumstances of thepresent case, the action of the authorities below inmaking addition qua the advances, by rejecting thetransactions made through cheque is legally sustainablein the eyes of law? Whether under the facts and circumstances of thepresent case, the action of the authorities below inmaking addition qua the advances, by rejecting thetransactions even when corroborated by the creditorsthemselves through their statements and affidavits, islegally sustainable in the eyes of law? Whether under the facts and circumstances of thepresent case, the action of the authorities below inmaking addition qua the advances, by rejecting thetransactions made through cheque, is legally sustainablein the eyes of law? Whether under the facts and circumstances of thepresent case, the action of the authorities below in making additions merely on the basis of presumptions, is legally sustainable in the eyes of law? (vi)Whether under the facts and circumstances of thepresent case, the action of the authorities below inmaking additions even when the genuineness of thetransactions was fully explained by the appellant-assessee, thereby discharging its onus, is legallysustainable in the eyes of law? 3.The facts, in brief, necessary for adjudication as narratedin the appeal, are that the appellant-assessee is a partnership firmengaged in the financial activities and is earning interest from theparties. The assessee filed its return of income for the assessmentyear 1998-99, on 31.10.1998, declaring income of Rs. 6,889/-. Theassessing officer, however, made assessment under Section 148 ofthe Act. Certain short-comings and deficiencies were detected by theassessing officer in the return filed. Accordingly, the assessing officernoticed that the deposits made by the creditors of the assessee asshown in the books of account were not genuine, inasmuch as noconfirmation and verification had been furnished by the assesseeand, thus, made an addition of Rs. 1,97,000/-. The assessing officeralso disallowed 1/4[th] of the actual expenses of Rs. 67,767/- andfurther added a sum of Rs. 16,942/-, vide order dated 1.12.2000. 4.Appeal filed by the assessee before the Commissioner ofIncome-tax (Appeals) {in short “the CIT(A)”}, was partly allowed videorder dated 29.11.2002. The CIT(A) deleted the addition of Rs.16,942/- that had been made owing to disallowance of 1/4[th] of theactual expenses of Rs. 67,767/-. The CIT(A), however, sustained the 4.Appeal filed by the assessee before the Commissioner ofIncome-tax (Appeals) {in short “the CIT(A)”}, was partly allowed videorder dated 29.11.2002. The CIT(A) deleted the addition of Rs.16,942/- that had been made owing to disallowance of 1/4[th] of theactual expenses of Rs. 67,767/-. The CIT(A), however, sustained the addition of Rs. 1,97,000/- made by the assessing officer. Theassessing officer vide order dated 24.12.2004 had imposed penaltyamounting to Rs. 68,949/- for concealment of income under Section271(1)(c) of the Act. Appeal was dismissed by the CIT(A) on24.8.2005 affirming the penalty imposed by the assessing officer. 5.Not satisfied with the order of the CIT(A), the assesseepreferred two appeals before the Tribunal. One appeal was filedchallenging that part of the order whereby the CIT(A) confirmed theaddition of Rs. 1,97,000/- pertaining to the credits of various partiesshown in the books of the assessee, under Section 68 of the Act.The second appeal was filed raising a plea that the CIT(A) was notjustified in not deleting the penalty of Rs. 68,949/- under Section 271(1)(c) of the Act. The Tribunal vide order dated 23.12.2008dismissed the appeals and this led to the filing of the instant appealat the instance of the assessee. By the impugned order levy ofpenalty under Section 271(1)(c) of the Act was also upheld by theTribunal. The assessee filed Income Tax Appeal No. 65 of 2010against the order of the Tribunal sustaining levy of penalty underSection 271(1)(c) of the Act. The said appeal has been dismissed byus vide separate order passed today. 6.In this appeal, the assessee has challenged the order ofthe authorities below whereby its plea that the advances amountingto Rs.1,97,000/- made by the creditors were genuine, was notaccepted. 7.The Tribunal while upholding the findings of theassessing officer which were affirmed by the CIT(A) holding that the deposits made by the creditors amounting to Rs. 1,97,000/- were not genuine, had recorded as under: “We have considered the rival submissions and perusedthe material available on the file. Brief facts are that theassessee is a partnership firm engaged in the financialactivities and is earning interest from the parties. TheAssessing Officer found that there were certain creditentries standing to the credit of the assessee fromvarious parties. The Assessing Officer specially asked theassessee to furnish the confirmation of deposits of thesecredits which were not furnished by the assessee.Admittedly, the assessee filed the copy of account ofS/Shri Subhash Chand, Basesar Dayal from whom theamount of Rs. 50,000/- and Rs. 18,000/-, respectivelywere shown to be received through cheque. But no suchconfirmations were filed by these concerned persons,consequently the amounts were added to the income ofthe assessee. In the case of Shri Sachin Kumar for creditof Rs. 36,000/- neither the confirmation nor any copy ofaccount was filed. Identical situation was in the case ofSmt. Kiran Bala, Shri Banarsi Dass and Shri Ram Gopal,consequently, the addition of Rs. 1,97,000/- was made onaccount of these credits u/s 68 of the Act. On appeal, theassessment order was upheld which is under challengebefore the Tribunal. As far as the contention that proper opportunity wasnot provided to the assessee, we are not agreeing with As far as the contention that proper opportunity wasnot provided to the assessee, we are not agreeing with the argument because even during assessmentproceedings opportunities were provided and theassessee did not file the requisite details in spite of thefact that the case was adjourned on various dates forfiling such confirmation / details. Even before the Ld. FirstAppellate Authority, Shri Vinay Goyal, C.A. appeared.Since the assessee did not file requisite details and nospecific infirmity has been pin pointed in the impugnedorder, the same is upheld. Even otherwise, the burden ison the assessee to prove the source of receipt. For theproposition, we are supported by the decision in the caseof Roshan Di Hatti vs. CIT (107 ITR 938) (SC) and also inthe case of Kalekhan Mohammad Hanif vs. CIT (50 ITR1) (SC). Reliance can also be placed in the case ofAdditional CIT Vs. Bahri Bros. (154 ITR 244) (Pat.) In thelight of the facts and judicial pronouncements, the standof the Ld. CIT(A) is upheld. Consequently, this ground ofthe assessee is dismissed.” 8. The aforesaid findings whereby the advances made bythe creditors were held to be not genuine have not been shown aserroneous or perverse in any manner. Accordingly, no substantialquestion of law arises in this appeal and the same is dismissed. (AJAY KUMAR MITTAL) JUDGE JUDGE April 19, 2011*rkmalik* (ADARSH KUMAR GOEL) JUDGE JUDGE