Surinder Kumar v. Cit, Central Revenue Building, Bathinda

IN THE HIGH COURT OF PUNJAB AND HARYANA ATCHANDIGARH ITA No.318 of 2008 Date of decision: 16.12.2008 Surinder Kumar Vs. -----Appellant CIT, Central Revenue Building, Bathinda. --Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOELHON'BLE MR JUSTICE L.N.MITTAL Present: Mr. R.L.Gupta, advocate for the appellant. Ms.Savita Saxena, Standing Counsel for the revenue. Adarsh Kumar Goel,J. 1. This appeal has been preferred by the assessee under section 260A of the Income Tax Act, 1961 against the order of theIncome Tax Appellate Tribunal, Amritsar Bench, Amritsar passedin ITA No.255(ASR)/2007 dated 8.2.2008, proposing to raisefollowing substantial questions of law:- “i) Whether the Income Tax authorities havingrejected the books of account while determining incomefrom business should not have relied on the same booksof account for the purpose of making the additions towards cash credits of the depositors in the facts andcircumstances of the case? ii) Whether on the facts and circumstances of the case,Income Tax authorities are right in holding the additionon account of the cash creditors and interest thereon inthe facts and circumstances of the case and more so inthe face of their findings having rejected the books ofaccount? 2.While making assessment, the Assessing Officerrejected the books of account of the assessee and computed grossprofit by applying flat rate on the total turnover. The CIT(A)substantially upheld the order of assessment except to an extent asmentioned therein. The Tribunal also substantially upheld the orderof assessment except to an extent indicated. The Tribunal held asunder:- “24. We have heard both the parties and consideredthe rival contentions, examined the facts, evidenceand material placed on record. We have alreadysustained the trading addition of Rs.2,28,960/- madeby the AO. We have also upheld the additions ofRs.1,64,000/- made on account of unexplainedcredits. Besides, the addition of Rs.71,000/- made inrespect of squared up accounts has also been upheldin principle subject to working out the addition on the basis of peak credits. The basis and rationalebehind sustaining the addition on account ofunexplained credits is that the money belongs to theassessee and the same has been introduced in thebooks of account. However, the fact remains that theassessee has been carrying on business and themoney generated represents income of assessee fromsuch business. Therefore, if trading addition ofRs.2,28,960/- made by the AO is confirmed, theassessee would be entitled to claim benefit of thesame against the addition on account of cash credits.Reliance in this regard is placed on the judgment ofHon’ble Supreme court in the case of AnantharamVeerasinghaiah and Co. v. CIT, 123 ITR 457, wherethe Hon’ble Apex Court has observed that theintangible addition made to the book profits duringan assessment proceeding, is as much a part of hisreal income as that disclosed in the books ofaccount. Therefore, the assessee can avail benefit ofsuch addition for explaining the source ofinvestments or of cash credits. Similarly, in the caseof Shiv Charan Dass v. CIT 126 ITR 263 and CIT v.Prem Chand Jain, 189 ITR 320, the Hon’ble Punjaband Haryana High Court has held that the assesseewould be entitled to claim the benefit of telescopingof the addition for explaining the source ofinvestment or of cash credit. Thus, the action of CIT(A) is in conformity with the ratio of the aforesaidjudgments of the Hon’ble Apex Court and the jurisdictional High Court. Thus, we do not find anyjustification to interfere with the order of the CIT(A). The same is upheld and this ground of appeal isdismissed.” 3.We have heard learned counsel for the parties. jurisdictional High Court. Thus, we do not find anyjustification to interfere with the order of the CIT(A). The same is upheld and this ground of appeal isdismissed.” 3.We have heard learned counsel for the parties. 4.The substantial questions of law proposed cannot beheld to be questions of law, as there is no inflexible rule that booksof account must either be accepted or rejected. In view of infirmityfound, result shown in books of account having not been accepted,for making best judgment assessment, entries in books of accountcould be looked into by the Assessing Officer. Making ofassessment differs from case to case and there cannot be any rigidprinciple. 5.No substantial question of law arises. 6.The appeal is dismissed. (Adarsh Kumar Goel)Judge December 16, 2008‘gs’ (L.N.Mittal)Judge