Raj Kumar Mangla v. Assistant Commissioner Of Income Tax ,Gurgaon

In the High Court for the States of Punjab and Haryana at Chandigarh… ITA No.263 of 2007 Date of decision:8.4.2008 Raj Kumar Mangla.. .. Appellant Versus Assistant Commissioner of Income Tax ,Gurgaon .. Respondent Coram: Hon’ble Mr.Justice Satish Kumar MittalHon'ble Mr.Justice Rakesh Kumar Garg Present:Mr.Anand Chhibber Advocatefor the appellant/Assessee. Rakesh Kumar Garg,J A search under section 132(1) of the Income TaxAct,1961(for short “the Act”) was carried out at the residentialpremises of the assessee/appellant on 20.1.1988 and a sum ofRs.1,25,000/- was surrendered by the assessee/appellant havingbeen invested in shares of Indian Companies, which were notdeclared in the income tax returns during the preceding assessmentyears. The assessee/appellant filed return of income relevant tothe assessment year 1988-89 showing a total income of Rs.51,378/-.As shown in the statement of assessable income, theassessee/appellant has earned the above income from severalsources, namely, salary, business, house property and othersources. During the assessment year, the assessee/appellant was employed with M/s Ravi Trading Company, Gurgaon, a proprietaryconcern of appellant's wife. He had shown an income of Rs.54,000/-earned as salary from this concern and had claimed deduction undersection 16(1) of the Act under the head “Income from Salaries”. Hehad also received commission amounting to Rs.19,400/- fromemployment contract. The assessee/appellant claimed an ad hocdeduction of Rs.5000/- against the said receipts. He had alsoclaimed deduction under Section 80C of the Act for a sum ofRs.10000/- paid under self financing scheme to Rajasthan HousingBoard. The Assessee had also shown a business loss of Rs.54000/-on the ground that he had incurred loss on account of investment inthe purchase of shares. The assessee had also purchased a MarutiCar on 28.3.1988 for a sum of Rs.95000/-. The assessee claimedthat he used this vehicle as taxi in the last three days of the yearunder consideration,i.e., 28.3.1988 to 31.3.1988 and received anincome of Rs.715/- as taxi charges. The assessee also claimedexpenses incurred on petrol for running the vehicle and depreciationagainst the said vehicle. The Assessing officer vide his order dated 9.3.1990assessed the appellant while making assessment. The income ofRs.19400/- on account of commission, deduction claimed undersection 80C(2)(h)(ii) of the Act on payment of house loan, businessloss ofRs.54,000/- and the income/expenditure and depreciationclaimed on the car was disallowed by the Assessing Officer. Thededuction on account of business loss of Rs.54000/- was alsodisallowed by the Assessing Officer holding the same as a ITA No.263 of 2007 speculative loss. The Assessing Officer observed that the primaryfact for claiming depreciation was to off set or liquidate thesurrendered amount of Rs.125000/- at the time of the search andaccordingly the Assessing Officer neither included the allegedincome of Rs.715/- for running the car as taxi in the income of theassessee nor allowed depreciation claim. The Assessee filed an appeal before the Commissioner of Income Tax(Appeals), Faridabad(for short the “CIT(A)”)challenging the said order of the Assessing Officer. The CIT(A),Faridabad vide his order dated 19.1.1993 allowed the appeal of theassessee partly giving a relief of Rs. 3904/- to the assessee, ITA No.263 of 2007 speculative loss. The Assessing Officer observed that the primaryfact for claiming depreciation was to off set or liquidate thesurrendered amount of Rs.125000/- at the time of the search andaccordingly the Assessing Officer neither included the allegedincome of Rs.715/- for running the car as taxi in the income of theassessee nor allowed depreciation claim. The Assessee filed an appeal before the Commissioner of Income Tax(Appeals), Faridabad(for short the “CIT(A)”)challenging the said order of the Assessing Officer. The CIT(A),Faridabad vide his order dated 19.1.1993 allowed the appeal of theassessee partly giving a relief of Rs. 3904/- to the assessee, Still not satisfied with the said order, the assessee filed anappeal before the Income Tax Appellate Tribunal, Delhi Bench”D”,New Delhi(for short the “Tribunal”). The Tribunal partly allowed theappeal filed by the assessee and held that the assessee is entitled toclaim deduction under section 80C in respect of instalment paid forallotment of house under self financing scheme and directed to allowdeduction to the assessee for Rs.10000/- in this regard. Similarly, theTribunal found that there was no justification for the AssessingOfficer in holding that the loss of Rs.50000/- from share businesswas speculative as the genuineness of purchase and sale of shareswas not in doubt. Thus, the Tribunal directed the Assessing Officer toallow the loss of Rs.50000/- as a normal business loss of theassessee on account of share business. However, the claim of theassessee with regard to income of Rs.19,400/- received as acommission and an ad hoc deduction for expenses of Rs.5000/- for ITA No.263 of 2007 earning this income was rejected. In view of the judgment of theHon'ble Supreme Court of India in the case of Gestetnor DuplicatorsPvt. Ltd. Vs.CIT 117 ITR 1 wherein it was held that the appellant hasgot salary and commission under the contract of employment,therefore, the commission income so received was assessee'sincome from salary and the assessee has been given standarddeduction under the head “Income from salaries” and therefore, he isnot entitled to the claim of expenses of Rs.5000/- made over andabove the standard deduction permissible under the statute. TheTribunal also rejected the claim of the assessee on account ofincome of Rs.715/- earned from taxi business and expenses incurredby the assessee on petrol and depreciation of the car. While rejectingthe claim of the appellant, the Tribunal found that the assessee hasnot challenged the exclusion of receipts as taxi charges from hisincome by the Assessing Officer and is only disputing thedisallowance of claim of expenses like petrol, payment of salary tothe Driver and depreciation. The Tribunal also found that the claim ofthe assessee remained unsubstantiated in this regard. Feeling not satisfied with the order of the Tribunal, theassessee has filed the present appeal challenging the order of theTribunal dated 13.1.2006 passed by the Income Tax AppellateTribunal, Delhi Bench”D”, New Delhi in Income Tax AppealNo.2301/Del/1993 relevant to the assessment year 1988-89 raisingthe following substantial questions of law:- i)Whether the Assessing Officer had any jurisdiction tonot to include any income defined in sections 16 to 65 of the Income Tax Act, 1961 when duly shown in theStatement of Assessable income filed along with thereturn of income by the petitioner? ii) Whether the Assessing Officer was justified in denyingpetitioner claim from the business of hiring of car as Taxion the ground that the assessee earned salary incomeand claimed standard deduction and as suchdepreciation can not be allowed? i)Whether the Assessing Officer had any jurisdiction tonot to include any income defined in sections 16 to 65 of the Income Tax Act, 1961 when duly shown in theStatement of Assessable income filed along with thereturn of income by the petitioner? ii) Whether the Assessing Officer was justified in denyingpetitioner claim from the business of hiring of car as Taxion the ground that the assessee earned salary incomeand claimed standard deduction and as suchdepreciation can not be allowed? iii)Whether the Commissioner of Income Tax(Appeals),Faridabad was right in law in disallowing petitioner claimdespite the fact that the witnesses not only submittedaffidavits, audited balance sheets, books of accountsand answered questions raised by the Commissioner ofIncome Tax(Appeals), while invoking provision u/s 131 ofthe Income Tax Act,1961 ? iv) Whether the Income Tax Appellate Tribunal was rightin law in not granting permission to the petitioner to not toamend revised ground No.4 dated 13.9.2002 despitethere was no order of the Appellate Tribunal asking thepetitioner to file revised ground or revised ground havingbeen allowed prior to final date of hearing on21.12.2005 ? v) Whether the Income Tax Appellate Tribunal was rightin law in denying relief in respect of expensesofRs.5000/- from commission income despite havingbeen allowed in preceding and succeeding assessment years relying upon Gestetnor Duplicators Pvt. Ltd. Vs.CIT 117 I.T.R. 1 (S.C.) despite no specificagreement/contract in petitioner's case ? vi) Whether the Income Tax Appellate Tribunal was rightin law in disallowing petitioner claim in respect of revisedground of appeal No.4 dated 13.9.2002 on the guise thatthe claim of not including income from hiring of car astaxi as well as expenses and depreciation has not beenchallenged before them despite the fact that thepetitioner had challenged the same before the AppellateTribunal in the original ground No.5 of the memo. Ofappeal dated 16.4.1993 as well as ground No.7 of theconcised grounds of appeal dated 23.2.1994 ? We have heard Shri Anand Chhibbar, Advocate, learnedcounsel for the assessee/appellant and perused the record. Althoughas many as six questions have been raised by the appellant in hismemo. of appeal. However, Mr.Chhibbar has addressed hisarguments only on question No.2,i.e., with regard to the rejection ofthe claim of the appellant on account of expenses and depreciationfor running of taxi by the appellant. He has very fairly stated that theother questions of law as raised by the appellant does not arisesfrom the order of the Tribunal. He has vehemently argued that thevehicle was admittedly purchased and brought into businessoperation during the year under appeal and the statute did not barthe appellant from earning under more than one head of income andtherefore, the claim of the appellant has been wrongly rejected by the respondent/authorities. respondent/authorities. We find no force in the contention raised by the counselfor the appellant. Admittedly, the Car was purchased on 28.3.1988for Rs.95000/- and a temporary registration number was allotted to it.The assessee has claimed that he used this vehicle as taxi in the last3 days of the year under consideration and received the income ofRs.715/- from three persons. The assessee has claimed that forearning this income, he has incurred expenses on petrol and salaryof the Driver and therefore, he is entitled to the deduction of theseexpenses. The assessee also claimed depreciation of the Car fromhis income. However, a pure finding of fact has been recorded by theTribunal and other revenue authorities to the effect that the appellantdid not have any permission to ply the vehicle as a taxi and thatvehicle bearing temporary number could not be used as a taxi.Besides this, it has also been found as a matter of fact that thepayment of salary to the Driver has not been proved. Moreover, theassessee has not disputed the exclusion of income of Rs.715/-received as taxi charges from the computation of income by theappellate authority. On the basis of these facts, the Tribunal hasgiven a pure finding of fact that claim of the assessee in this regardremained unsubstantiated. The authorities below have found that theprimary fact for claiming depreciation by the assessee in this regardwas to off set or liquidate the surrendered amount of Rs.1,25,000/- atthe time of search. In view of the above said finding of fact, we are not ITA No.263 of 2007 inclined to entertain the present appeal. No substantial questions oflaw arises for our determination in the present appeal, the same ishereby dismissed. (RAKESH KUMAR GARG) JUDGE April 8,2008 nk (SATISH KUMAR MITTAL) JUDGE