Sunder Chhabra v. Deputy Commissioner Of Income Tax

ITA No. 461 of 2010 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Sunder Chhabra, Prop. M/s Sanitary Sales Versus Deputy Commissioner of Income Tax ITA No. 461 of 2010 Date of Decision: 28.9.2010 ....Appellant. ...Respondent. CORAM:-HON'BLE MR. JUSTICE ADARSH KUMAR GOEL.HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. K.L. Goyal, Senior Advocate with Mr. Sandeep Goyal, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1.This appeal has been preferred by the assessee underSection 260A of the Income Tax Act, 1961 (in short “the Act”) againstthe order dated 30.10.2009 passed by the Income Tax AppellateTribunal, Amritsar Bench, Amritsar (hereinafter referred to as “theTribunal”) in ITA N. 351(ASR)/2009 for the assessment year 2006-07proposing following substantial question of law:- “Whether on the facts and circumstances of the case,the Ld. Tribunal was justified in upholding theaddition of Rs.1,74,140/- on account of unsecuredloans even though the creditors have confirmed thesame along with bank statement and source beingwith them?” 2.Put shortly, the facts as narrated in the appeal are that theassessee filed its return for the assessment year in question on26.10.2006 showing an income of Rs.13,60,026/- on which the tax waspaid. During the course of assessment, the Assessing Officerdisallowed unsecured loan of Rs.73,145/- obtained from Smt. Rosy wifeof the assessee and Rs.1,02,745/- from Shri Sanjeev Kumar, HUF. TheAssessing Officer made an addition of Rs.3,80,364/- and assessed thetotal income at Rs.17,40,390/-. Feeling aggrieved, the assessee tookthe matter in appeal and the Commissioner of Income Tax (Appeals) [inshort “the CIT (A)”] sustained the addition of Rs.1,74,140/- underSection 68 of the Act and partly accepted the appeal vide order dated12.6.2009. On further appeal by the assessee, the Tribunal partlyallowed the appeal on other grounds and had sustained the addition forthe loans received by the assessee under Section 68 of the Act.Hence, the present appeal by the assessee. 3.We have heard learned counsel for the appellant. 4.The assessee is aggrieved by the addition of Rs.1,74,140/-made by the Assessing Officer, upheld by the CIT (A) and affirmed bythe Tribunal on account of unexplained cash credit. The AssessingOfficer while making the said addition had recorded as under:- “4.The assessee has introduced, inter alia, an amountof Rs.73,145/- as new unsecured loan from his wife, Smt.Rosy Chhabra, as under:- Rs.53,145/- on 16.03.2006 Rs.20,000/- on 17.03.2006 The copy of bank account of Smt. Rosy Chhabra revealed that these amounts were advanced out of a creditentry of Rs.73,170/- in her bank account on 13.03.2006.Further enquiries about the source of Rs.73,170/- revealedthat this amount was allegedly received by her from somecommodity transactions through M/s S.P. Scripts Ltd.,Ludhiana. The detail of the alleged transactions throughM/s S.P. Scripts, Ludhiana has been noticed as under:- Name ofDateofAmount ofDateofAmount ofProfitthepurchasepurchasesale shownsale shownshowncommodityshownshownCrude Oil03.02.2006 2,74,200/-08.03.2006 2,98,000/-23,800/-TUR04.02.2006 3,59,000/-09.03.2006 3,97,400/-38,400/-Gwar Seed 03.02.2006 1,65,800/-10.03.2006 1,76,770/-10,970/-73,170/- 4.1Similarly the assessee introduced an amount of Rs.1lac from Sh. Sanjeev Kumar HUF on 18.03.2006. Sh.Sanjeev Kumar is assessee's first cousin. The copy ofbank account of Sh. Sanjeev Kumar HUF revealed that thisamount was advanced out of a credit entry of Rs.1,02,745/-in his bank account on 16.03.2006. Further enquiries aboutthe source of Rs.1,02,745/- revealed that this amount wasalso allegedly received by him from some commoditytransactions through M/s S.P. Scripts Ltd., Ludhiana. Thedetail of the alleged transactions through M/s S.P. Scripts,Ludhiana has been noticed as under:- ITA No. 461 of 2010 4.1Similarly the assessee introduced an amount of Rs.1lac from Sh. Sanjeev Kumar HUF on 18.03.2006. Sh.Sanjeev Kumar is assessee's first cousin. The copy ofbank account of Sh. Sanjeev Kumar HUF revealed that thisamount was advanced out of a credit entry of Rs.1,02,745/-in his bank account on 16.03.2006. Further enquiries aboutthe source of Rs.1,02,745/- revealed that this amount wasalso allegedly received by him from some commoditytransactions through M/s S.P. Scripts Ltd., Ludhiana. Thedetail of the alleged transactions through M/s S.P. Scripts,Ludhiana has been noticed as under:- ITA No. 461 of 2010 4.2The statement of Smt. Rosy Chhabra was recordedin this office and it was stated, interalia, by her as under:- “I do not know the person who is running thebrokerage agency. I do not give any advance to that person. I do not know about the commission paid to thebrokerage agency. I have seen the relevant copies of papers showingthe purchase & sale of commodities and find thatthere is no entry of commission on these papers. The transaction with the brokerage agency wasthrough some common friend of my husband atLudhiana. No delivery was taken. The common friend of my husband was the suretywith the brokerage agency. During the next financial year also, the transaction ofcommodity future was done and I do not know thename of the brokerage agency. It is known to the common friend of my husband.” 4.3Sh. Sanjeev Kumar on behalf of his HUF also statedas under:- “I do not know the person who is running thebrokerage agency. I do not give any advance to that person. I do not know about the commission paid to thebrokerage agency. I have seen the relevant copies of papers showingthe purchase & sale of commodities and find thatthere is no entry of commission on these papers. The transaction with the brokerage agency wasthrough some common friend at Ludhiana. No delivery was taken. The common friend was the surety with thebrokerage agency. During the next financial year also, the transaction ofcommodity future was done and I do not know thename of the brokerage agency. It is known to thecommon friend. I do not know the profit earned by me in the next yearand I do not know whether the profit was advanced toSh. Sunder Chhabra or some other person or lying inmy own account.” 4.4The state of affairs gets revealed through thestatements of Smt. Rosy Chhabra and Sh. Sanjeev Kumar clearly highlights that the transactions allegedly enteredinto by them are not genuine. Both the persons admittedthat they did not know about commission paid to thebrokerage agency, that they did not know the person whowas running the brokerage agency and that during the nextfinancial year also, the transaction of commodity future wasdone and they do not know the name of the brokerageagency. As is well known, every person doing thebrokerage business of such type involving heavytransactions would not take the risk without adequatesecurity amount. Both the persons have also admitted theirignorance about the commission charged by the broker. Itis also interesting to note that the assessee furnishedaffidavits from both the persons suo motto on the last dayof the hearing wherein it was found to have been statedthat the broker company charged brokerage which wasincluded in the purchase price. It is thus clear that thepurpose of furnishing affidavits by the assessee is anattempt to fortify his case, otherwise how it could happenthat these persons could not tell about the issue ofcommission at the time when their statements wererecorded. It can thus be concluded very rightly that theamounts allegedly received by the assessee from these twopersons are his own money camouflaged as received fromthem through transactions which have been found to be ingenuine. As such amounts of Rs.73,145/- and Rs.1,00,000/- are added to the income returned by theassessee u/s 68 of the Act as the assessee's explanationabout the nature and source of these amounts has notbeen found satisfactory. The interest paid by the assesseein respect of these amounts worked out/ noticed at Rs.460/-& Rs.535/- are also being disallowed and added to theincome returned. Total addition under this para works outat Rs.1,74,140/- (73,145/- + 1,00,000/- + 460/- + 535/-).Penalty proceedings u/s 271(c) qua this question ofRs.1,74,140/- are being initiated as I feel satisfied that theassessee has furnished inaccurate particulars of hisincome.” 5. The said finding was affirmed by the CIT (A) and the Tribunal. 6.Learned counsel for the appellant made strenuous efforts inorder to re-appreciate the evidence to arrive at a conclusion other thanthe one concurrently arrived at by the authorities below. He submittedthat the finding is perverse and is not based on the material on record.He placed reliance on the judgment of the Hon'ble Supreme Court inC.I.T. (Central), Calcutta v. Daulat Ram Rawatmull, [1973] 87 ITR349 (SC) and the judgments of Rajasthan High Court and Gauhati HighCourt in Gem Palace v. Commissioner of Income Tax, [1987] 168ITR 543 and Nemi Chand Kothari v. Commissioner of Income Taxand another, [2003] 264 ITR 254, respectively. 7.We have given our thoughtful consideration to thesubmissions made by the learned counsel for the assessee and do not find any merit in the same. 8.The Assessing Officer, the CIT (A) and the Tribunal haveconcurrently arrived at the conclusion that two cash credits allegedlyadvanced by Rosy Chhabra wife of the assessee amounting toRs.73,145/- and Sanjit Kumar cousin of the assessee in respect ofRs.1,00,000/- and the interest paid by the assessee thereon of Rs.460/-and Rs.535/- respectively were unexplained cash credit which wereadded under Section 68 of the Act. Only effort on the part of thelearned counsel for the assessee is to reappreciate the material andconclude otherwise. All the authorities have concurrently onappreciation of material come to the conclusion that the two cashcredits were the unexplained money of the assessee introduced by himin the business. The authorities have taken a plausible view which doesnot call for any interference under Section 260A of the Act. 9.The judgments, referred to above, have no applicability asthey were on the individual fact situation of the cases which were beforethe courts. 10.In view of the above, no substantial question of law arisesin this appeal. 11.The appeal is accordingly dismissed. (AJAY KUMAR MITTAL) JUDGE September 28, 2010gbs (ADARSH KUMAR GOEL)JUDGE