Parvinder Jit Singh Bindra v. Commissioner Of Income Lax, Central Circle, Ludniana

ITA No. 168 of 2014 =|. IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH IIA No. 168 of 2014 Date of Decision: 16.99.2014 | Parvinder Jit Singh Bindra ...Appellant Versus Commissioner of Income lax, Central Circle, Ludniana| ... Respondent CORAM:-HON BLE MR. JUSTICE AJAY KUMAR MITTAL.HON BLE MR. JUSTICE FATER DEEP SINGH. PRESENT: Mr. Jorawar Singh Bhasin, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.This appeal has been filed by the assessee under Section260A of the Income Tax Act, 1961 (in short “the Act’) against the orderdated 19.12.2013 (Annexure A-3) passed by the Income Tax AppellateTribunal, Amritsar Bench, Amritsar (hereinafter referred to as ‘theTribunal’) in ITA No. 270(ASR)/2010 for the assessment year 2001-02,claiming the following substantial questions of law:- “A)Whether in the facts and circumstances of thecase, the ACIT Central Circle-l, Jalandhar, wasvested with valid jurisdiction to make reguiarassessment under section 143(3), when thejurisdiction was transferred to him to makeblock assessment under section 158 BC, whichwas dropped for non-execution of warrants ofcase, the ACIT Central Circle-l, Jalandhar, wasvested with valid jurisdiction to make reguiarassessment under section 143(3), when thejurisdiction was transferred to him to makeblock assessment under section 158 BC, whichwas dropped for non-execution of warrants of ITA No. 168 of 2014 =2= autnorization wnen the casn seized was notnanded over by tne FEMA authorities? B) Whether the Iridunal was correct In confirmingthe regular assessment made under section143(3) by ACIT Central Circle-|, Jalandhar, forAssessment Year 2001-02 as valid, without firstdeciding whether ne was vested with acompetent jurisdiction over the appellant, wnenthe block assessment nad been dropped by /E C)Whether in the facts and circumstances of thecase, the Ila. |TAl was correct in holding tnat tnwarrant for requisition issued under section132A remained unexecuted, simply because thecash seized by FEMA autnorities was _ nothanded over to AO, even when books ofaccount and other documents were alreadyhanded over, and whether such a finding Is notcontrary to clause (b) to Explanation 2 ofsection 158BE whnere under the authorizatiou/s 132 is deemed to be executed on receipt ofeither the books of account or other documentsor assets by the Authorized officer’D)Whether in the facts and circumstances of thecase, the IIAI was_ legally’ correct inmechanically confirming the addition of Rs.16lacs without adverting to tne documentary ITA No. 168 of 2014 a evidence placed on record, more particularlythe sworn affidavit of Mr. Banerjee, confirmingthe transaction of having paid and also receivedback the said amount by drafts, besidesdisclosing nis new address, his PAN and otherassessment i particulars, which = remain unrebuttea E) F) VVnetner in the facts and circumstances of thcase, the Id. Tribunal was right In confirming theestimated addition of Rs.10 lacs made inassessment towards commission earned on thealleged distribution of compensatory paymentsby relying upon statement and documents,recorded/seized by FEMA authorities, wnen thesame documents were ignored to hold that theauthorization made u/s 132A was not executed,and also when there was no_ Independentstatement recorded by Income tax authorities?Whether in the facts and circumstances of thecase, the order of the Tribunal is perverse andhence illegal being contrary to facts andevidence brought on record’ D Briefly the facts as pleaded in the instant appeal may benoticed. On 24.12.2000, a search was conducted by the authoritiesunder the Foreign Exchange Management Act (FEMA) at the residentialpremises of the assessee and certain documents along with cashamount of|L12,30,000/- was seized. The vehicle of the assessee was ITA No. 168 of 2014=4. D Briefly the facts as pleaded in the instant appeal may benoticed. On 24.12.2000, a search was conducted by the authoritiesunder the Foreign Exchange Management Act (FEMA) at the residentialpremises of the assessee and certain documents along with cashamount of|L12,30,000/- was seized. The vehicle of the assessee was ITA No. 168 of 2014=4. intercepted by the Police at Phagwara on 29.1.2001 while the assesseewas on the way back to Jalandhar from Delhi and casn amount ofL15,85,350/- out ofL16,00,000/- was taken In custoay. FIR undersections 411/414 of the Indian Penal Code and sections 3(0) and 3(C) ofthe FEMA was also registered in this regara on the same day,Subsequently, the income tax authorities issued warrant of authorizationunder Section 132A of the Act to the FEMA authorities for obtaining thesaid amount of.=12,30,000/-. The assessee filed return of income on3.11.2001 for the assessment year 2001-02 declaring the income at438,430/- with the regular ward 2(2), Jalandhar. However, theCommissioner of Income Tax-ll vide order dated 4.1.2002 transferred thejurisdiction of the assessee from Ward 2(2), Jalandhar to Central Circle-il, Jalandnar. Accordingly, Assistant Commissioner of Income lax,Central Circie-Il, Jalandhar issued a notice under Section 158BC of theAct for filing return for the block period ending 24.8.2001. In pursuancethereto, the assessee filed return on 2.9.2002 for the block perioddeclaring undisclosed income at.=12,30,000/- and also offered tax dueto be adjusted from the said seized amount. The said return was takenup for scrutiny and notice under Section 143(2)/142(1) dated 5.9.2002along with a questionnaire was sent to the assessee. However, theproceedings under Chapter XIV-B of the Act were dropped as warrant ofauthorization remained unexecuted. Thereafter, the return for theassessment year 2001-02 filed under Section 139 of the Act was takenup for scrutiny and the regular assessment under Section 143(3) of theAct was framed vide order dated 26.3.2004 (Annexure A-1) at a totalincome of.428,68 ,340/-. The amount of=12,30,000/- declared in blockassessment was questioned and added besides making another aadaitio ITA No. 168 of 2014=5- OT 416,00,Q0Q0Q0/- being credit received trom Mr. Banerjee, aS aavancagainst the sale of property at Jalandnar as per agreement dated2¢/.1.2001 (Annexure A-4). Commission income ot 410 lacs was alsoassessed from alleged distridbution of Hawala money thougn It wastelescoped against the addition ot412.30 lacs cash seized. Feelingaggrieved against the assessment order, the assessee Tiled an appealbefore Commissioner of Income lax (Appeals) who vide order dated19.3.2010 (Annexure A-2) upneld the order of the Assessing Officer anddismissed the appeal. Still dissatisfied, the assessee filed an appealbefore the Tribunal. The Tribunal vide order dated 19.12.7013)(Annexure A-3) partly allowed the appeal. Hence, the present appeal.3)Learned counsel for the assessee-appellant submitted thatthe assessee could nave been assessed under Section 158BC otf tne Acand not under Section 143(3) of the Act as warrant of authorizationunder Section 132A of the Act stood executed. It was also submittedthat the authorities below nad erred In adding |416 lacs which wasagainst the documentary evidence placed on record. Reference wasalso made to the affidavit of Mr. Banerjee confirming the transaction ofnaving paid casn to the assessee. 4 After hearing learned counsel for the appellant, we do notfind any merit in the appeal. In so far as the first Submission isconcerned, the Tribunal while repelling the contention of the assesseehad noticed that the warrant of authorization under Section 132A of theAct had never been carried out as cash of=17.30 lacs was not handedover to the Income Tax Department. The assessment under Section158BC of the Act is a special provision and the conditions prescribedthereunder are required to be satisfied before any action for block ITA No. 168 of 2014 4 After hearing learned counsel for the appellant, we do notfind any merit in the appeal. In so far as the first Submission isconcerned, the Tribunal while repelling the contention of the assesseehad noticed that the warrant of authorization under Section 132A of theAct had never been carried out as cash of=17.30 lacs was not handedover to the Income Tax Department. The assessment under Section158BC of the Act is a special provision and the conditions prescribedthereunder are required to be satisfied before any action for block ITA No. 168 of 2014 assessment can be initiated. [ne assessee nad not even paid the taxesdue as per return filed for the block period ana tne Assessing Officer hadrightly dropped the proceedings under Chapter XIV-B of tne Act.Moreover, special rate of tax of 60% has been prescribed on theundisclosed income of the block period under Section 113 of the Actwhich is higher than the rate of taxation on the income assessed undersection 143(3) of the Act. Learned counsel for the assessee-appellantwas not able to refer to any provision whereby it could be held that therewas any bar to frame reguiar assessment under Section 143(3) of theAct in the present case. Furthermore, learned counsel has also not beenable to snow that any prejudice has been caused to the assessee byframing of regular assessment under Section 143(3) of the Act.5.in view of the above and tn the facts and circumstances, theassessment framed under Section 143(3) of the Act was In consonancewitn the provisions of the statute. Thus, the Tirst contention Is rejected.6 Adverting to the second submission, the I[ridbunal onappreciation of material on record came to the conclusion that theamount was unaccounted in the hands of the assessee. The AssessingOfficer had doubted the paying capacity of Mr. Banerjee and no materialnad been produced to snow that Mr. Banerjee had the capacity to paythe amount. The affidavit of Mr. Banerjee by itself would not be sufficientto conclude that he had the capacity to pay the amount in the absence ofany supporting material to substantiate the availability of funds with himto give it to the assessee. The findings recorded by the Tribunal are asunder': “17)Ve nave nearda the rival contentions andperused the facts of the case. At the outset, we are of ITA No. 168 of 2014 =/- the view that the Ld. CIIT(A) has passed a veryreasoned order and we find no infirmity in the same.The reason given by the La. CII(A) Is valid that as peragreement datea 27.01.2001, the assessee wasclaimed to have received a sum of Rs.16 lacs paid bypurchaser. As per the terms and conditions of theagreement, If the seller did not nonour tne agreementthen the purcnaser was entitled to double of theearnest money |.e. Rs.32 lacs from the seller of theproperty. Also, none of the seller or purchaser tookany legal step against the other party who defaulted inhonouring the terms and conditions of the agreement.No details have been placed on record as to wnat wasthe compromise between the two parties and how theaeal was called off. [nere are variations In all thedocuments and in the name of the purchaser and nowitness to the agreement. 18.As regards the identity, credit worthiness andgenuineness of the transaction, filing of the affidavitdoes not prove credit worthiness and genuineness ofthe transaction ana it Is a story which has beenfabricated as a subterfuge to explain the seized cashof Rs.16 lacs. The Ld. CIT(A) has relied upon thedecision of the Hon'ble Punjab and Haryana HighCourt in the case of Dr. Prem Chand Sharma vs. CIT181 Taxmann 186. Accordingly, in the facts andcircumstances of the case, the Ld. CIT(A) rightly ITA No. 168 of 2014 -8- rejected the contention of the assessee and hasrightly confirmed the action of AO. We find noinfirmity in his order. nus, ground No.3 of theassessee is dismissed.” 18.As regards the identity, credit worthiness andgenuineness of the transaction, filing of the affidavitdoes not prove credit worthiness and genuineness ofthe transaction ana it Is a story which has beenfabricated as a subterfuge to explain the seized cashof Rs.16 lacs. The Ld. CIT(A) has relied upon thedecision of the Hon'ble Punjab and Haryana HighCourt in the case of Dr. Prem Chand Sharma vs. CIT181 Taxmann 186. Accordingly, in the facts andcircumstances of the case, the Ld. CIT(A) rightly ITA No. 168 of 2014 -8- rejected the contention of the assessee and hasrightly confirmed the action of AO. We find noinfirmity in his order. nus, ground No.3 of theassessee is dismissed.” [.Accordingly, no question of law muchless a_ substantialquestion of law arises in this appeal for consideration of this Court,Consequently, finding no merit In the appeal, the same is herepydismissed. (AJAY KUMAR MITTAL) JUDGE September 16, 2014(FATEH DEEP SINGH))5!JUDGE