Shri Mahavir Prasad v. Income Tax Officer, Ward

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH. I.T.A. No. 70 of 2008DATE OF DECISION : 01.02.2008 Shri Mahavir Prasad .... APPELLANT Versus Income Tax Officer, Ward No.2, Bhiwani ..... RESPONDENT CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTALHON'BLE MR. JUSTICE RAKESH KUMAR GARG Present:Mr. Vinod S. Bhardwaj, Advocate, for the appellant-assessee. * * * SATISH KUMAR MITTAL, J. The assessee has filed this Appeal under Section 260 A of theIncome Tax Act, 1961 (hereinafter referred to as `the Act') against the orderdated 26.10.2007, passed by the Income Tax Appellate Tribunal, BenchDelhi, Delhi (hereinafter referred to as `the ITAT'), in ITA No. 2597 (Del.)/2005 dated 26.10.2007, pertaining to the assessment of the assessee for theyear 1997-98. In this appeal, the assessee has raised the following substantialquestions of law :- (i)Whether the order is liable to be set aside as it enhancesthe income of the assessee? (ii)Whether the order is liable to be set aside as it tends tosubject the income to dual taxation?subject the income to dual taxation? (iii)Whether the error in the source of income amounts toconcealment of income?concealment of income? (iv)Whether an assessee can be made liable to pay tax on themoney which is not the income of the assessee and wherethe assessee has merely acted as a Post Office?money which is not the income of the assessee and wherethe assessee has merely acted as a Post Office? (v)Whether the income can be presumed beyond theaccepted statement of accounts?accepted statement of accounts? (vi)Whether the order is liable to be set aside being in non-appreciation and misreading of the facts?appreciation and misreading of the facts? We have heard learned counsel for the appellant and have gonethrough the orders, passed by the Assessing Officer, Commissioner ofIncome Tax, Hisar, as well as the ITAT. In the present case, the assessee filed his income tax return forthe assessment year 1997-98 on 2.9.1997, which was processed underSection 143 (1) of the Act vide order dated 27.2.1998 and a refund of Rs.1,380/- was granted to him. Later on, on the basis of the informationgathered from the file of M/s Om Parkash & Co., Charkhi Dadri, it wasrevealed that the assessee had deposited a sum of Rs. 4,00,000/- with thesaid firm by cheque drawn on Oriental Bank of Commerce, Bhiwani andsource of such deposit was not verifiable from the return originally filed bythe assessee. As such, due to failure on the part of the assessee to disclose In the present case, the assessee filed his income tax return forthe assessment year 1997-98 on 2.9.1997, which was processed underSection 143 (1) of the Act vide order dated 27.2.1998 and a refund of Rs.1,380/- was granted to him. Later on, on the basis of the informationgathered from the file of M/s Om Parkash & Co., Charkhi Dadri, it wasrevealed that the assessee had deposited a sum of Rs. 4,00,000/- with thesaid firm by cheque drawn on Oriental Bank of Commerce, Bhiwani andsource of such deposit was not verifiable from the return originally filed bythe assessee. As such, due to failure on the part of the assessee to disclose fully and truly the facts necessary for the assessment, the proceedings undersection 147 of the Act were initiated and a notice dated 30.3.2001 underSection 148 of the Act was issued to him. In response to the notice, theassessee filed return showing the same income of Rs. 46,100/-, which wasshown in the return originally filed by him. The assessment was completedby the Assessing Officer vide his order dated 28.3.2003 by making anaddition of Rs. 68,000/- being the amount deposited in cash in assessee'sbank account and thus, the total income of the assessee was taken as Rs.1,14,100/-. Later on, the Commissioner of Income Tax, Hisar, while takingthe view that the order of the Assessing Officer was erroneous anddetrimental to the interest of the revenue, issued a notice dated 28.2.2005 tothe assessee under Section 263 (1) of the Act, requiring him to show causeas to why an appropriate order under Section 263 of the Act be not passed inrespect of the aforesaid credit shown in the account of M/s Om Parkash &Co. The Commissioner, after hearing the assessee, came to the conclusionthat before the Assessing Officer, the assessee had taken a categoric standthat four credits were received by him from four different persons, namelySarvshri Vinod Kumar, Parveen Kumar, Banwari Lal and Sushil Kumar. Insupport thereof, he placed on record letters of confirmations, affidavits, theirstatements of income etc. As a matter of fact, it was found by the AssessingOfficer that the said stand taken by the assessee was totally wrong, as thesaid credits did not flow from the aforesaid four persons. However, it wasobserved that the alleged credits in the hand of the assessee were received to the extent of Rs. 3.08 lakh from Sarvshri Surinder Sharma and DineshKumar and the said money was advanced by the assessee to M/s OmParkash & Co. along with an amount of Rs. 68,000/-, which was depositedby the assessee in cash. Therefore, on the basis of that reasoning, theAssessing Officer had made addition of Rs.68,000/-. The Commissioner ofIncome Tax, while considering all these facts, came to the conclusion thatthe Assessing Officer has wrongly accepted the explanation with regard toan amount of Rs. 3,08,000/- and therefore, vide his order dated 28.3.2005,directed the Assessing Officer to make an addition of Rs. 3,08,000/- beingunexplained investment over and above the addition of Rs. 68,000/- alreadymade as income from undisclosed sources and further directed to initiatepenalty proceedings under Section 271 (1) (c) of the Act for furnishinginaccurate particulars of income. Against the aforesaid order of the Commissioner of IncomeTax, Hisar, the assessee filed an appeal before the ITAT, which has beenpartly allowed to the extent of initiation of penalty proceedings underSection 271 (1) (c) of the Act, but the remaining part of the order of theCommissioner, Income Tax has been upheld, while observing as under : “... The case of the assessee before the Assessing Officer wasthat four credits were received from four persons, namely,S/Shri Vinod Kumar, Parveen Kumar, Banwari Lal and SushilKumar. In support thereof, letters of confirmations, affidavits,their statements of income etc. were filed. Sections 68, 69, 69- Against the aforesaid order of the Commissioner of IncomeTax, Hisar, the assessee filed an appeal before the ITAT, which has beenpartly allowed to the extent of initiation of penalty proceedings underSection 271 (1) (c) of the Act, but the remaining part of the order of theCommissioner, Income Tax has been upheld, while observing as under : “... The case of the assessee before the Assessing Officer wasthat four credits were received from four persons, namely,S/Shri Vinod Kumar, Parveen Kumar, Banwari Lal and SushilKumar. In support thereof, letters of confirmations, affidavits,their statements of income etc. were filed. Sections 68, 69, 69- A etc. place initial burden on the assessee to explain the sourceof credit, investment, money etc. There could be two situations,namely, that – (i) no explanation is furnished, or (ii) theexplanation is furnished. In the first eventuality, the sum can becharged to income-tax without any further enquiry. In thesecond eventuality, the Assessing Officer has to examinewhether the explanation furnished furnished by the assesseewas satisfactory or not. There can be any number of possibleexplanations, but the Assessing Officer has to consider theexplanation on record, more so when such explanation isbacked by substantial evidence filed by the assessee. Thisexamination has to be conducted on an objective basis and noton subjective basis. Nonetheless, it has to be examined by theAssessing Officer whether the explanation was satisfactory ornot. Although the bank informed the Assessing Officer that thecredits were received from S/Shri Surinder Sharma and DineshKumar, the explanation of the assessee was not that theamounts were received from these persons. Thus, on the basisof facts available on record of the Assessing Officer, theexplanation furnished by the assessee was not merely notsatisfactory but was also false. Such an evidence can not bebecause of oversight or loss of memory because positive actionwas required on behalf of the assessee and the alleged creditors. In such a situation, the credits having been received from ShriSurinder Sharma & Dinesh Kumar could not have beenaccepted to be the explanation of the assessee, explaining thedeposits in the bank in a satisfactory manner. Therefore, thetheory that the assessee was merely a conduit for transfer ofmoney from Shri Surinder Sharma and Shri Dinesh Kumarcould not have been accepted by the Assessing Officer on thefacts on record. The fact is that the credits were received fromcertain persons for which there was no satisfactory explanationfurnished by the assessee. Rather, the credits were stated tohave been received from totally different persons and evidence,including affidavits was created to show that the credits werereceived from those persons.” After hearing counsel for appellant and going through theimpugned orders, we are of the opinion that on the basis of materialevidence available on the record, the Commissioner of Income Tax hasrecorded a pure finding of fact and on the basis of said finding of fact, theAssessing Officer was directed to add a sum of Rs. 3.08 lakhs to the incomeof the assessee in respect of the credits, which according to the version ofthe assessee is received from four persons and the said stand was found tobe false. Both the authorities have categorically found that in the facts andcircumstances of the case, the Assessing Officer has wrongly accepted thatthe said amount was received by the Assessee from Surinder Sharma and Dinesh Kumar, because the said fact is totally contrary to the stand taken bythe assessee and the evidence and material produced by the assessee himselfto show that the said credit was received by him from those four persons.Thus, we are of the view that in this appeal, no substantial question of law isarising from the order of the ITAT. Dismissed. ( SATISH KUMAR MITTAL )JUDGE February 01, 2008 ( RAKESH KUMAR GARG )ndjJUDGE