Swarn Singh v. Commissioner Of Income Tax, Patiala

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : I. T. A. No. 342 of 2016 (O&M)Decided On : November 10, 2016 Swarn Singh ....Appellantvs.Commissioner of Income Tax, Patiala ....Respondent CORAM : HON'BLE MR. JUSTICE S. J. VAZIFDAR, CHIEF JUSTICE.HON'BLE MR. JUSTICE DEEPAK SIBAL. * * * Present :Mr. Sachin Bhardwaj, Advocate for the appellant. * * * DEEPAK SIBAL, J. : Invoking Section 260-A of the Income Tax Act, 1961 (for short– the Act), the assessee has filed the present appeal, which pertains to theAssessment Year 2009-10 and seeks to raise therein the followingsubstantial questions of law :- “I.Whether under the fact & circumstances ofthe case, the Tribunal order isunreasonable while overlooking & neitherreturning any findings on the `fact anddirect evidence` u/s 32 of Indian EvidenceAct, 1872 qua the existence of the payee tothe capital account transactions u/s 2(14)of the Income Tax Act, 1961 ? II.Whether under the fact & circumstances ofthe case, pursuant to the Provisions of Section 2(14), 45(1) r.w Section 51, theadvance money arising out of agreement tosell shall be deducted from the `cost ofasset' and (or) the whole amount is`chargeable' to tax u/s 5 as `revenuereceipt' ?” In the income of the assessee, as filed in his return, additionswere made by the Assessing Officer to the tune of ` 28.50 lacs on accountof unexplained deposits made by him in his bank accounts. On beingquestioned by the Assessing Officer, the assessee sought to explain theaforesaid deposits by stating that he had received cash on the sale of PlotNo. 9, Bhogla Road, Rajpura (for short – the Plot) and Shop No.2, VillageChhura (for short – the Shop). As per the assessee, in pursuance to theagreement to sell the Plot, he had received ` 9.50 lacs on 29.01.2009 and` 13.50 lacs on 02.02.2009 from S/Shri Sanjay Kumar, Harbilas andSubhash Kumar. Such cash was deposited by him on the same date in hisaccount but since the deal could not mature, the agreement to sell wascancelled and the amount of ` 12 lacs was repaid by the assessee on02.03.2009. The balance amount was repaid in the Assessment Year2011-12. So far as the Shop is concerned, it was the case of the assesseethat as per the agreement to sell, the assessee had received ` 5 lacs fromShri Bhoop Narayan, which was deposited by him in his bank account. On being asked, the assessee could not produce S/Shri SanjayKumar and Harbilas, who allegedly along with Shri Subhash Kumar hadMonika2016.11.18 16:50I attest to the accuracy andpaid cash to him to the tune of ` 23 lacs. Shri Subhash Kumar wasauthenticity of this document produced but he could not explain the source of the cash allegedly given byhim to the assessee. He also denied having knowledge of the whereaboutsof S/Shri Sanjay Kumar and Harbilas, who incidently, along with him, werealso a party to the agreement to sell the Plot. The agreement to sellproduced by him was not on judicial paper. As per the address given on theagreement of S/Shri Sanjay Kumar and Harbilas, the Assessing Officerissues notices to them under Section 131 of the Act. However, thesummons were received back in the office with the remarks that at the givenaddress of Shri Sanjay Kumar, no such person was found and that thefather's name of Shri Harbilas was not correct. In spite of final opportunitygranted to the assessee, he failed to produce the above said two persons. So far as the assessee's explanation with regard to the receipt of` 5 lacs from one Shri Bhoop Narayan, in pursuance to the agreement to sellof the Shop was concerned, on summons having been issued, Shri BhoopNarayan appeared but his explanation with regard to the sources of fundswas found to be unsatisfactory. In view of the aforesaid facts, the Assessing Officer rejectedthe explanation of the assessee and ordered the addition of ` 23 lacs and ` 5lacs to his income. So far as the assessee's explanation with regard to the receipt of` 5 lacs from one Shri Bhoop Narayan, in pursuance to the agreement to sellof the Shop was concerned, on summons having been issued, Shri BhoopNarayan appeared but his explanation with regard to the sources of fundswas found to be unsatisfactory. In view of the aforesaid facts, the Assessing Officer rejectedthe explanation of the assessee and ordered the addition of ` 23 lacs and ` 5lacs to his income. returns. The Assessing Officer ordered the addition of these amounts alsoto the income of the assessee. The challenge made to the aforesaid additions by the assesseebefore the Commissioner of Income Tax (Appeals) (for short – theCommissioner) was rejected. The Commissioner confirmed all theaforesaid additions by returning a finding of fact that it was improbable thatthe advances were received by the assessee from the alleged persons, assought to be explained by him. No reliance was placed on the agreement tosell produced by Shri Subhash Kumar as the same was on a plain paper.S/Shri Harbilas and Sanjay Kumar, who, along with Shri Subhash Kumarhad allegedly paid advances to the assessee, in spite of repeatedopportunities granted to the assessee, were not produced and they remaineduntraceable. The story set up by Shri Bhoop Narayan was also rejected bythe Commissioner as according to him, the same was also improbable. Sofar as the deposit of ` 50,000/- by the assessee in his bank account wasconcerned, no evidence was found to have been furnished by him to explainthe same. The matter was then carried by the assessee before the IncomeTax Appellate Tribunal, Division Bench, Chandigarh (for short – theTribunal). The matter was considered and to the afore-referred concurrentfindings arrived at by the Assessing Officer and the Commissioner, theTribunal also put its stamp of approval. It was found that the assessee hadnot satisfactorily explained the cash deposits made by him. At least two ofMonika2016.11.18 16:50I attest to the accuracy andauthenticity of this document the four persons, who had allegedly paid advances to him, were untraceable.The statements of the other two, who did appear before the AssessingOfficer, were considered and disbelieved. The alleged agreement to sellwith regard to the Plot, on the basis of which, the assessee allegedly hadreceived ` 23 lacs, was considered and rejected. It was found that theassessee had failed to prove the genuineness of the alleged transactionsleading to the receipt of advance of ` 23 lacs from three persons namelyS/Shri Sanjay Kumar, Harbilas and Subhash Kumar. It was further noticedthat despite the agreement with Shri Subhash Kumar having been cancelled,the entire advance money was not refunded to him immediately and it wasnot explained by the assessee as to what happened with regard to theamount refunded on cancellation of the agreement to S/Shri Sanjay Kumarand Harbilas as according to the assessee, amounts had been received byhim from them as well. It was still further noted that it was highlyunbelievable that the persons, who had given advances to the assesseenamely S/Shri Sanjay Kumar, Harbilas and Subhash Kumar had disappearedwithout seeking refund on the cancellation of the agreement to sell. On the issue of ` 50,000/-, as the assessee had produced noevidence, the addition made on that count, was upheld. The findings by the Tribunal read as under :- “6...... In the case of sale of shop No. 2,the assessee allegedly entered into agreement tosell with Shri Bhoop Narain. The advance isstated to have been paid in cash. No transactions On the issue of ` 50,000/-, as the assessee had produced noevidence, the addition made on that count, was upheld. The findings by the Tribunal read as under :- “6...... In the case of sale of shop No. 2,the assessee allegedly entered into agreement tosell with Shri Bhoop Narain. The advance isstated to have been paid in cash. No transactions have been done through banking channel. Theagreement to sell is not recorded on the judicialstamp papers to prove the genuineness of theagreement in the matter. The statement of ShriBhoop Narain was recorded by the AssessingOfficer in which he has explained to have onlymeager income and has three children. Therefore,he would not have any past savings to make anyadvance to the assessee. He was not maintainingany bank account. He has explained the source ofgiving Rs. 5 lacs to the assessee out of pastsavings of Rs. 1,50,000/- for which no evidencehas been furnished. Considering his meagerincome and large number of family members andthat he did not maintain any bank account, ShriBhoop Narain failed to prove any past savingswith him to advance any money to the assessee. Hehas further explained that Rs. 2,50,000/-wasreceived by him from his father but he has failed toproduce any evidence of taking any amount fromhis father and also failed to produce any evidenceof any land holding and identity of his father. Hehas further stated that he has received Rs. 1 lacfrom his two brothers-in-law Shri Rakesh Kumarand Shri Suresh Kumar but they were also havingonly meager salary income. 7. As regards the receipt of advance ofRs. 23 lacs from Shri Sanjay Kumar, Shri Harbilasand Shri Subhash Kumar on 29.01.2009 and02.02.2009, again the position is same because it was a cash transaction. No banking transactionshave been done and even the agreement inquestion was not executed on the judicial stamppapers to prove the genuineness of the agreementin question. The assessee failed to produce ShriSanjay Kumar and Shri Harbilas before AssessingOfficer for examination. The Assessing Officerissued summons against them but it was reportedthat no person by the name of Sanjay Kumar isresiding at the given address and in case of ShriHarbilas, name of his father was found incorrectand he was also not found at the given address.Therefore, in these cases, despite giving severalopportunities, assessee failed to prove even theiridentity, what to say of credit worthiness andgenuineness of the transaction in the matter. Theassessee, however, produced Shri Subhash Kumar,whose statement was recorded by AssessingOfficer but he has failed to produce any agreementto sell of his own house which was stated to havebeen sold and no particulars of purchaser weregiven. He was maintaining bank accounts but noamounts have been withdrawn from his bank togive any advance money to the assessee. He wasnot able to tell even the names of the persons withwhom he has entered into agreement for sale ofhis house. He has not established that he has soldany house and he was having any source to giveadvance to the assessee. Original agreement wasnot produced. The agreement in this case was alsonot on judicial paper. Despite the agreement with Shri Subhash Kumar was cancelled but entireadvance money was not refunded immediately toShri Subhash Kumar. It is not explained as to whathappened with regard to the amount refunded oncancellation of agreement to Shri Sanjay Kumarand Shri Harbilas. It is highly unbelievable thatthe persons who have given advance to theassessee namely Shri Sanjay Kumar and ShriHarbilas, have disappeared and never asked forrefund of their amount on cancellation of theagreement in question. Thus, assessee failed toprove credit worthiness and genuineness of thetransaction for receipt of advance of Rs. 23 lacsfrom above persons and even in the case of ShriSanjay Kumar and Shri Harbilas, assessee failedto prove their identity. Shri Subhash Kumar was cancelled but entireadvance money was not refunded immediately toShri Subhash Kumar. It is not explained as to whathappened with regard to the amount refunded oncancellation of agreement to Shri Sanjay Kumarand Shri Harbilas. It is highly unbelievable thatthe persons who have given advance to theassessee namely Shri Sanjay Kumar and ShriHarbilas, have disappeared and never asked forrefund of their amount on cancellation of theagreement in question. Thus, assessee failed toprove credit worthiness and genuineness of thetransaction for receipt of advance of Rs. 23 lacsfrom above persons and even in the case of ShriSanjay Kumar and Shri Harbilas, assessee failedto prove their identity. 8.In case of deposit of Rs. 50,000/- inthe bank account of the assessee, assessee failed toproduce any evidence of past savings and even thisissue was not at all addressed before ld. CIT(Appeals) and no evidence have been furnished inthis regard. Same is the position before us as theassessee has failed to produce any evidence ofdeposit of Rs. 50,000/- out of any known sources.” It can thus be seen that the present appeal does not raise anyquestion of law, much less a substantial question of law, for ourconsideration as in the same, purely questions of fact have been decidedand that too, concurrently by the Assessing Officer, the Commissioner as also the Tribunal. According to us, the order appealed against takes a view,which is probable and thus, the same is not perverse, warranting nointerference on our part. Dismissed. ( S. J. VAZIFDAR ) CHIEF JUSTICE November 10, 2016 monika ( DEEPAK SIBAL )JUDGE Whether speaking/reasoned ? Whether reportable ? Yes/No. Yes/No.