The Commissioner Of Income-Tax, Jalandhar v. Shri Subhash Sobti

IN THE HIGH COURT OF PUNJAB AND HARYANAAT CHANDIGARH I.T.R.No. 20 of 2002 DATE OF DECISION: FEBRUARY 04, 2008 The Commissioner of Income-tax, Jalandhar .....PETITIONER Versus Shri Subhash Sobti C/o M/s. Emm Ess SalesCorporation, Jalandhar ....RESPONDENT CORAM:HON'BLE MR.JUSTICE SATISH KUMAR MITTALHON'BLE MR.JUSTICE RAKESH KUMAR GARG--- Present:Mr. Sanjiv Bansal, Advocate,for the revenue. .. SATISH KUMAR MITTAL, J. At the instance of revenue, the Income Tax AppellateTribunal, Amritsar Bench, Amritsar (hereinafter referred to as `the ITAT')has referred the following substantial question of law for the opinion ofthis Court which is stated to have been arising out of the order dated26.02.1997 passed in ITA No.79 (ASR)/1991 in case of the assessee forthe Assessment Year 1981-82:- “Whether, on the facts and in the circumstances of the case,the Ld. ITAT is right in law in upholding the order of the ld.CIT(A) who deleted the addition of Rs.91,884/- made by theA.O. on account of unexplained investment in purchase of650 equity shares of M/s. Angoora Wool Combers Pvt. Ltd.@ Rs.8/- as against the market value of Rs.149.36?” In the present case, the assessee filed its return of income on 29.08.1981 declaring an income of Rs.9,660/- which was accepted underSection 143(1) of the Income Tax Act (hereinafter referred to as `theAct'). Subsequent to that assessment, an information was received fromthe Assistant Director of Inspection (INT), office of the Commissioner of I.T.R.No. 20 of 2002 -2- Income -tax (Central), Ludhiana that in the course of search and seizureoperation carried out at the residential premises of Shri J.C. Gupta and hisfamily members certain incriminating documents were found and seizedwhich indicated under statement of the cost of shares of M/s. AngooraWool Combers sold to the family members of Nagesh Hosiery Mills(Ludhiana Group) with which the assessee was closely related and hadpurchased 650 shares at the cost of Rs.8/- per share on 02.01.1981,whereas the market value of those shares was more. Accordingly, noticeunder Section 148 of the Act was issued by the Assessing Officer,Jalandhar to the assessee on 14.10.1986. In response to the said notice, areturn was filed by the assessee showing the share income of Rs.9,660/-on 22.12.1986. Thereafter, the Assessing Officer issued notice underSection 143(2) of the Act to the assessee. In response to the notice, theassessee replied that he had purchased shares @ Rs.8/- per share and hadmade the payment by cheque drawing the same from his saving bankAccount, and that he had not made any other payment except the saidpayment. It was stated that the said notice was issued by the AssessingOfficer only on the basis of a statement made by a third person whichcould not have been relied upon. The contention of the assessee was notaccepted and the Assessing Officer made the addition of Rs.91,884/- inthe hands of the assessee as income from other sources while taking thevalue of the purchased shares @ Rs.149.36 per share. Feeling aggrieved against the above order, the assessee filedan appeal before the Commissioner of Income Tax (Appeals), Jalandhar,who vide its order dated 4.10.1990 allowed the appeal and deleted theaddition of Rs.91,884/- made by the Assessing Officer while observing as under:- -3- “Similar issue was raised in the case of Shri Dharam Paul ofNagesh Hosiery Mills, Ludhiana, which came up forconsideration before the I.T.A.T. Chandigarh Bench, in ITANo.175(CHD)/1986 for the asstt. year 1981-82 who upheldthe order of the CIT(A) deleting the addition in the case ofShri Dharam Paul under similar circumstances. Followingthis, there is no justification for the addition in the case ofthe appellant. The addition is, therefore, deleted.” Being not satisfied with the order of the Commissioner ofIncome Tax (Appeals), the revenue sought the reference for considerationof opinion on the aforesaid question by this Court. under:- -3- “Similar issue was raised in the case of Shri Dharam Paul ofNagesh Hosiery Mills, Ludhiana, which came up forconsideration before the I.T.A.T. Chandigarh Bench, in ITANo.175(CHD)/1986 for the asstt. year 1981-82 who upheldthe order of the CIT(A) deleting the addition in the case ofShri Dharam Paul under similar circumstances. Followingthis, there is no justification for the addition in the case ofthe appellant. The addition is, therefore, deleted.” Being not satisfied with the order of the Commissioner ofIncome Tax (Appeals), the revenue sought the reference for considerationof opinion on the aforesaid question by this Court. It has not been disputed that the similar issue was raised bythe revenue in case of Shri Dharam Paul of Nagesh Hosiery Mills,Ludhiana, which came up for consideration before ITAT, Chandigarh inITA No. 175(CHD)/1986 for the Assessment Year 1981-82. In that case,the value of the shares of M/s. Angoora Wool Combers Pvt. Ltd. was heldto be @ Rs.8/- per share and the addition made by the Assessing Officerin case of the assessee pertaining to the higher value was deleted and theorder passed by the Commissioner of Income Tax (Appeals) was upheldby the ITAT. The said order became final. In view of the said fact, oncethe value of the shares of M/s. Angoora Wool Combers Pvt. Ltd. was heldto be @ Rs.8/- per share in the connected case, we do not find that in thisreference the substantial question of law, as referred to by the revenue, isarising from the order passed by the ITAT. Hence, the reference isanswered against the revenue and in favour of the assessee. Disposed of accordingly. (SATISH KUMAR MITTAL) JUDGE I.T.R.No. 20 of 2002 -4- vkg JUDGE