Shri Ramesh Chand (Huf v. Commissioner Of Income Tax, Karnal

ITA No. 123 of 2012 -1- IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH ITA No. 123 of 2012 (O&M)Date of decision: 28.01.2013 Shri Ramesh Chand (HUF) ...Appellant versus Commissioner of Income Tax, Karnal ..Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTAHON'BLE MS. JUSTICE RITU BAHRI Present:- Mr. S.K. Mukhi, Advocate for the appellant. HEMANT GUPTA, J. The assessee is in appeal under Section 260A of the Income TaxAct, 1961 (for short 'the Act') against the order dated 14.11.2011 passedby the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (forshort 'the Tribunal) in ITA No. 1454/CHD/2011 for the assessment year2007-08. Though the appellant framed six substantial questions of law,but on 06.12.2012, the appellant made a statement before this court notto press questions Nos. (A) and (C). Therefore, the following substantialquestions of law arise for consideration only:- “(B) Whether on the facts and in the circumstances of thecase, the Income Tax Appellate Tribunal was justified on facts and inlaw in confirming addition of Rs.6,16,150/- by invoking the provisionsof Section 40(A)(3) without appreciating the evidence and the expressprovisions of law which finding is perverse? (D) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified on facts and inlaw in confirming additions of Rs.19,867/- being hypothetical interest on the purchase advance made by A.O, ignoring the facts on record,relying upon various judgment though the same is not applicable inthe case of appellant which finding is perverse? (E) Whether on the facts and in the circumstances of thecase, the Income Tax Appellate Tribunal was justified on facts and inlaw in confirming addition of Rs.18,002/- out of interest paid on oldloan by alleging higher rate of interest by applying the provisions ofSection 40(A)(2)(b) of the Income Tax Act, 1961 which finding isperverse? (F) Whether on the facts and in the circumstances of thecase, the orders of the Income Tax Appellate Tribunal is perverse tothe extent of above said grounds/questions of law?” We have heard learned counsel for the appellant at length andfind that no substantial question of law arises for consideration by thisCourt. In respect of question No.B above, the appellant is said to havepurchased wheat from Shri Sai Baba Rice Traders, Naya Bazaar, Delhi for asum of Rs.39,25,680/-. Out of the said amount, Rs.8,44,934/- was foundto have been paid though cheques. The Assessing Officer found that thepayment of Rs.30,80,746/- was made by assessee otherwise by accountpayee cheque. Therefore, for the violation of Section 40A(3) of the Act,20% of the above amounting to Rs.6,16,150/- was disallowed and addedto the income of the assessee. Such order was affirmed by theCommissioner of Income Tax (Appeals) and the Income Tax AppellateTribunal. Learned counsel for the appellant has vehemently argued thatthe appellant has sold the wheat through M/s Shri Ganesh Trading Co.Naya Bazaar Delhi and such firm has made the payment. For the saidamount, the cheques were issued from the bank account of the said firm to the seller i.e Shri Sai Baba Rice Traders and therefore, the said amounthas been wrongly said to be in violation of Section 40A(3) of the Act. Insupport of such contention, learned counsel for the appellant relies uponthe certificate (Annexure A-5) by Shri Sai Baba Rice Traders in respect ofreceipt of the six cheques of Rs.30,80,746/- and also a copy of the ledgeraccount of M/s Shri Ganesh Trading Co. showing the issuance of thecheques of the aforesaid amount. Learned counsel for the appellant has vehemently argued thatthe appellant has sold the wheat through M/s Shri Ganesh Trading Co.Naya Bazaar Delhi and such firm has made the payment. For the saidamount, the cheques were issued from the bank account of the said firm to the seller i.e Shri Sai Baba Rice Traders and therefore, the said amounthas been wrongly said to be in violation of Section 40A(3) of the Act. Insupport of such contention, learned counsel for the appellant relies uponthe certificate (Annexure A-5) by Shri Sai Baba Rice Traders in respect ofreceipt of the six cheques of Rs.30,80,746/- and also a copy of the ledgeraccount of M/s Shri Ganesh Trading Co. showing the issuance of thecheques of the aforesaid amount. The learned Assessing Officer found that the appellant wasdirected to give evidence of payment made by account payee chequesvide order dated 30.11.2009, but the appellant has failed to give anyevidence. Though the failure of the appellant to give evidence during thecourse of assessment proceedings or in appeal before the Commissioner ofIncome Tax or the Tribunal is sufficient to confirm the findings of factrecorded by the authorities under the Act for the reason of failure of theappellant to produce the proof of payment through the account payeecheques before the authorities. But a perusal of the documents producedby the appellant shows that such document may not prove the paymentsas alleged. Annexure A-5 is the certificate given by Shri Sai Baba RiceTraders in respect of receipts of six cheques from M/s Shri Ganesh TradingCo. However, the statement of account from the ledger of M/s Shri GaneshTrading Co shows that the account produced is of Ram Nath RameshChand of whom the appellant is the proprietor. There is no endorsementin the said account that the cheques in the sum of Rs.30,80,746/- hasbeen issued to Shri Sai Baba Rice Traders for and on behalf of theappellant or that the said cheques were ever issued to Shri Sai Baba RiceTraders. In view of the said fact, we do not find that said substantial question of law arises for consideration. In respect of question No.D above, the appellant is said to havepaid in advance Rs.6 lacs to M/s Preet Service Station, Kaithal for purchaseof petrol pump. The appellant again relies upon his ledger account toprove that the payment was made for the purchase of petrol pump. In theledger account (Annexure A-7) of the appellant, there is no reference thatamount of Rs.6 lacs which was in pursuance of any agreement to sell. Learned counsel for the appellant contends that agreement tosell was the oral. Even if the agreement to sell was oral, the account booksof the appellant should have contain an entry of payment of Rs.6 lacs forthe purchase of petrol pump. Since, there is no such entry, we find thatthe findings of fact recorded by the authorities under the Act cannot besaid to be unjustified. In respect of question No.E above, the authorities under the Acthas added Rs. 18,002/- on account of higher rate of interest i.e 18.5%paid by the appellant to his mother as against the market rate of 15%.Learned counsel for the appellant relies upon the judgment of this Courtreported as Commissioner of Income Tax-I, Amritsar vs. SwaranSingh Balbir Singh, 1982 (P&H) 595. The learned Tribunal has returned a finding that the AssessingOfficer has considered the rate of interest paid by the appellant as higherin comparison to prevalent market rate of interest. The judgment referredis not applicable as a finding of fact has been recorded that the transactionin question is not a genuine and bona fide transaction. The said finding isagain the finding of fact. We do not find that even the said question arisesfor consideration. In view of the said fact, we do not find that any substantialquestion of law arises for consideration by this Court in the present appeal. Dismissed. January 28, 2013G.Arora (HEMANT GUPTA) JUDGE ( RITU BAHRI ) JUDGE