The Commissioner Of Income Tax, Hisar v. Sh. Balwant Rai

I.T.A. No. 54 of 2008 1 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH I.T.A. No. 54 of 2008 Date of decision: 11.04.2008 The Commissioner of Income Tax, Hisar ..... Appellant-revenue Versus Sh. Balwant Rai Prop. M/s S.N. Cotton & Mills,Bhattu Kalan, Fatehabad ..... Respondent-assessee CORAM: HON'BLE MR. JUSTICE SATISH KUMAR MITTALHON'BLE MR. JUSTICE RAKESH KUMAR GARG Present:-Mr. Yogesh Putney, Advocate for the appellant-revenue. RAKESH KUMAR GARG, J. The revenue has filed the present appeal underSection 260-A of the Income-Tax Act, 1961 ( hereinafterreferred to as the “I.T. Act” ) against the order dated20.05.2007 passed by the Income-Tax Appellate Tribunal,Delhi Bench “SMC.” Delhi ( hereinafter called the Tribunal ) inI.T.A. No. 3475/DEL/2006 for the assessment year 2003-04,raising the following substantial questions of law:- “1. Whether on the facts and in the circumstances of the case, the Ld. Tribunal was justified in cancelling thepenalty levied u/s 271(1)(c) of the Income Tax Act byignoring that the surrender of income of Rs.267155/-forming basis of penalty was not voluntary in goodfaith but was only when cornered from all angles aboutthe unexplained investment in purchase of Sarson?2. Whether on the facts and in the circumstances of thecase, the Ld. ITAT was right in cancelling the penaltyon erroneous factual findings?” A Flying Squad of Market Committee, Sirsachecked the stock of respondent-assessee on 12.03.2003 andexcess stock of sarson was found, for which composition fee,fine and penalty was imposed. On the basis of this information,notice dated 27.08.2004 under Section 142(1) of the IT Act wasissued to assessee. The return of income was filed on16.05.2005 declaring an income of Rs.39190/-. The assesseewas required to explain the source for which the excess stockdetected by the market committee was made. Ultimately, theassessee came forward with the proposals for surrendering thevalue of excess stock subject to no penal action, which was notaccepted by the Assessing Officer and addition of Rs.267155/- I.T.A. No. 54 of 2008 on account of unexplained investment in excess stock ofsarson was made by him vide order dated 17.06.2005.Penalty proceedings under Section 271(1)(c) of the IT Act werealso initiated against the assessee. The Income Tax Officer,Ward -2, Fatehabad vide order dated 23.03.2006 imposedpenalty to the tune of Rs.84155/- under Section 271(1)(c) ofI.T. Act upon the assessee. Appeal filed by the assessee challenging orderdated 23.03.2006 imposing penalty upon him, was dismissed bythe Commissioner of Income Tax (Appeals), Rohtak, vide orderdated 17.08.2006. Still dis-satisfied with the order of CIT(A),Rohtak, the assessee filed further appeal before the Tribunal,who vide its order dated 25.05.2007, accepted the appeal andset aside the order of the lower authorities and cancelled thepenalty of Rs.84155/-, levied by the Assessing Officer underSection 271(1)(c) of the I.T. Act. Aggrieved against the order of the Tribunal, therevenue has filed the present appeal. Mr. Yogesh Putney, learned counsel for the revenuehas argued that the findings of the Tribunal are contrary to the facts available on record. He has further argued that the assesseehad not been able to adduce any evidence in assessment as well aspenalty proceedings to rebut that the appellant/assessee had un-accounted stock on which composition fee was paid by him to themarket committee. He further argued that the bonafide of therespondent/assessee is doubtful as he has neither deliberatelyshown the true stock nor discharged the onus of proving thegenuineness of the purchase of sarson from the agriculturists. We have heard learned counsel for the appellant-revenueand perused the record. Aggrieved against the order of the Tribunal, therevenue has filed the present appeal. Mr. Yogesh Putney, learned counsel for the revenuehas argued that the findings of the Tribunal are contrary to the facts available on record. He has further argued that the assesseehad not been able to adduce any evidence in assessment as well aspenalty proceedings to rebut that the appellant/assessee had un-accounted stock on which composition fee was paid by him to themarket committee. He further argued that the bonafide of therespondent/assessee is doubtful as he has neither deliberatelyshown the true stock nor discharged the onus of proving thegenuineness of the purchase of sarson from the agriculturists. We have heard learned counsel for the appellant-revenueand perused the record. After perusing the documents placed on record, theTribunal has given a finding that the Assessing Officer had notverified the contention of the assessee-appellant that the stock isverifiable from the books of account. There was no un-explainedinvestment made for the purchase of said sarson in order to attractthe provisions of section 69 of the Act. The Tribunal also foundthat the Assessing Officer had not given clear findings to showthat the alleged stock was outside the books of account and theappellant had made surrender for the stock found by the FlyingSquad of Market Committee, in order to purchase piece of mind.The Tribunal also found that the Assessing Officer had proceededonly on the basis of information collected from the MarketCommittee and he had not verified the contention of respondent- assessee that the stock is verifiable from the books of account.The Tribunal also found that the respondent has discharged hisliability by placing on record affidavits filed by the agriculturists,to show the genuineness of the transaction and that was notdisputed. Undisputedly they were not summoned by thedepartment under Section 131 of the Act and thus the revenuefailed to adduce evidence to contradict the claim of the assessee-respondent and he simply rested his conclusion on the act ofvoluntary surrender done by the appellant in good faith. Thecircumstances do not lead to the reasonable and positive inferencethat the assessee's explanation is false. Thus, we find no groundto interfere in the well reasoned order passed by the Tribunal. Noquestions of law are arising for determination of this Court inthis appeal and the same is hereby dismissed. ( RAKESH KUMAR GARG )JUDGE ( SATISH KUMAR MITTAL )JUDGE