Surinder Kumar v. The Income-Tax Officer, Ward-I, Narnaul (Haryana

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 90 of 2008 (O&M) Date of decision: 29.7.2009 Surinder Kumar Vs. The Income-Tax Officer, Ward-I, Narnaul (Haryana). ......Appellant ...Respondent CORAM:-HON'BLE MR.JUSTICE ADARSH KUMAR GOELHON'BLE MRS.JUSTICE DAYA CHAUDHARY PRESENT:Mr.K.L.Goyal, Sr. Advocate with Mr.Manoj Rohilla, Advocate, for the appellant. Mr.Aman Bansal, Advocate, for the respondent. **** ADARSH KUMAR GOEL, J. (Oral) 1.The assessee has preferred this appeal under Section 260A ofthe Income Tax Act, 1961 (for short, “the Act”) against the order dated31.5.2007 passed by Income Tax Appellate Tribunal, Delhi Bench-I, Delhiin ITA No. 1692/Del/2005 for assessment year 1996-97, proposing to raisethe following substantial questions of law: i) “ Whether on the basis of reasons recorded by the Assessing Officer to the effect thatthe assesses has purchased Fixed DepositReceipts in a Bank during a particularassessment year, proceedings underSection 147 of the Income Tax Act can beinitiated without recording a specificfinding that these investments are out of income, which escaped assessment.? ii)Whether provisions of Section 69A of theAct ibid relating to unexplained moneycan be invoked for treating any amount,as income of a particular assessment year,when no actual money was found inpossession of the assessee during thatperiod?Act ibid relating to unexplained moneycan be invoked for treating any amount,as income of a particular assessment year,when no actual money was found inpossession of the assessee during thatperiod? iii)Whether the departmental authorities canpartly reject and partly accept theexplanation made by an assesses, relatingto money available in assessment years1994-95 and 1995-96 when thatexplanation together in same contestdisclosing true facts relating to moneyhad by him in the past, which wasinvested in the banks in subsequentassessment years?partly reject and partly accept theexplanation made by an assesses, relatingto money available in assessment years1994-95 and 1995-96 when thatexplanation together in same contestdisclosing true facts relating to moneyhad by him in the past, which wasinvested in the banks in subsequentassessment years? iv)Whether the ld. ITAT is justified inupholding the action of authorities belowthat the income of Rs.696500/-isassessable during assessment year 1996-97 as cash available (opening balance) on1.4.95, u/s 69A of the Act ibid.?”upholding the action of authorities belowthat the income of Rs.696500/-isassessable during assessment year 1996-97 as cash available (opening balance) on1.4.95, u/s 69A of the Act ibid.?” The assessee purchased fixed deposit receipts. Two of the said receipts were purchased for the assessment year 1996-97, which is the yearin question and two receipts were purchased for the subsequent year. Theincome which led to the said investment was not disclosed. The AssessingOfficer initiated assessment proceedings on acquiring information about thesaid fixed deposit receipts and after following the necessary procedure, heldthat the amount invested in the said fixed deposit receipts representedundisclosed income and made addition accordingly. The plea of theassessee that the amount represented saving of the assessee was rejected.The addition has been upheld by the CIT (A) as well as the Tribunal. TheTribunal observed: The assessee purchased fixed deposit receipts. Two of the said receipts were purchased for the assessment year 1996-97, which is the yearin question and two receipts were purchased for the subsequent year. Theincome which led to the said investment was not disclosed. The AssessingOfficer initiated assessment proceedings on acquiring information about thesaid fixed deposit receipts and after following the necessary procedure, heldthat the amount invested in the said fixed deposit receipts representedundisclosed income and made addition accordingly. The plea of theassessee that the amount represented saving of the assessee was rejected.The addition has been upheld by the CIT (A) as well as the Tribunal. TheTribunal observed: “We have carefully considered thesubmissions of both the parties. In this case,the entire dispute revolves around as towhether or not the assesses has satisfactorilyexplained the investment made in the FDRsof Rs.1,50,000/- each on 9.6.95 and 14.8.95.The explanation for the source of the fundsis ostensibly the availability of cash in handwith the assessee as at the beginning of theprevious year under consideration i.e.1.4.95. According to the assessee, the saidsum has been carried over from the earlieryear. The AO has noted that as on 1.4.95,the assessee was only 19 years old and wasnot having any source of income and neither the assessee has filed any income tax returnfor any of the prior years. The AO hasfurther noted that assessee in theassessment proceedings for the assessmentyears 1998-99 to 2000-01 has admitted thatprior to the impugned assessment year, hewas only a student and was not gainfullyemployed. The AO further noted that theassessee admitted that he was notmaintaining any regular books of account.All these factors have been noted by the AOat page 3 of his order under points (i) to (v).The AO has specifically noted that therewas no evidence with regard to the sourceof income which has enabled the assessee tobuild upo a cash in hand of Rs.6,96,500/-.The explanation thus offered by the assesseshas been found to be unsatisfactory by theAO as well as by the CIT (A). Before us,the assessee has not rebutted any of thefactors which have enabled the AO to holdthe explanation regarding the source ofaddition of Rs.6,96,500/- as unsatisfactory.The plea of the assesses, based on thejudgment of the Hon'ble Delhi High Court in the case of Om Parkash Mahajan (supra)does not help the case of the assessee. Wehave perused the said decision. In that case,the wife of the assessee had disclosed on30.3.66 a sum of Rs.10,000/- under theVDIS. A credit for such amount was foundin assessee's books of account on 4.4.1966.The assessee explained that such amountrepresented the monies available with hiswife as on 30.3.66. The Tribunal held thatthe immediate source and nature of the cashcredit stood explained and held that theamount obviously has been in existence ason 30.3.66. Therefore, no addition could bemade in the hands of the assessee fortreating the credit as unexplained in theassessment year 1967-68. In that case theentire issue rested on the fact that theTribunal accepted the explanation to theextent that the amount was in existence ason 30.3.66 though it did not accept the factthat it belonged to the wife of the assessee.However, as a natural corollary, theTribunal deduced that it could not havebeen earned in the accounting period relevant to asstt. Year 1967-68 was in thisbackground the Hon'ble High Court opinedthat where explanation that the entry inassessee's accounts relates to income earnedin some earlier period and not in theaccounting period to which the accountrelates is accepted, the presumption inSection 68 of the Act does not apply and theamount cannot be taxed in the instant year.The ratio of the decision cannot be appliedto the facts of the instant case. In the presentcase, in contrast, the explanation of theassessee that the said sums representedmonies earned in the period upto 31.3.95has not been found to be satisfactory. In thecase before the High Court, the VDISdeclaration in the prior period was acceptedwhich provided the support to theexplanation furnished by the assessee. Thereis no material in this case to justify thesource of income of the assesses upto31.3.95. Thus, the presumption of therevenue to treat the income represented byRs.6,96,500/- as taxable in the instant yearcannot be doubted. Hence, on this aspect, the assessee has to fail” 3.We have heard learned counsel for the parties. 4.Learned counsel for the appellant submitted that the additionwas not justified. Merely because the explanation of the assessee was notacceptable was no ground to made addition, as addition under Section 69 ofthe Act was in the discretion of the Assessing Officer and was notimperative. He relied upon the judgment of the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Smt. P.K.Noorjahan [1999] IncomeTax Reports 570 and submitted that in that case, having regard to the ageof the assessee, it was observed that the assessee could not have any sourceof income and the view taken by the Tribunal and the High Court in thatcase that addition was not called for, was upheld. 5. It was also submitted that the investment in the form of fixeddeposit receipts for the assessment year 1997-98 could not be included inthe income of the year 1996-97. This aspect has also been duly consideredby the CIT(A) and the Tribunal and the findings recorded cannot be held tobe perverse. 6.We do not find any merit in the submission. Whether in agiven situation, case was made out for making addition of income whichcould not be explained by the assessee, was a question of fact. In thepresent case, the findings having been recorded by the Assessing Officer,CIT(A) as well as the Tribunal that the assessee had unexplained incomewhich could be added to taxable income, cannot be held to be perversemerely because the assessee was aged 19. 7.In view of the above, the substantial questions of law proposed are mere questions of fact. No substantial question of law arises. 8.The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE (DAYA CHAUDHARY)July 29, 2009 JUDGEraghav Note: Whether this case is to be referred to the Reporter? ........Yes/No