The Commissioner Of Income Tax,Faridabad v. Ashok Arora

IN THE HIGH COURTOF PUNJAB AND HARYANA, CHANDIGARH. ITA No. 59 of 2009 Date of decision: 9.3.2009 The Commissioner of Income Tax,Faridabad vs. ....Appellant Ashok Arora ...Respondent CORAM:HON'BLE MR.JUSTICE J.S.KHEHAR.HON'BLE MR.JUSTICE HEMANT GUPTA. --- Present:Mr.Yogesh Putney, Senior Standing Counsel,for the appellant.-- J.S.KHEHAR,J. The assumption that the respondent-assessee had evaded his taxliability was made by the Assessing Officer ( in the assessment order dated24.3.2005) on the basis of material depicting that the assessee had investedin fixed deposits in banks i.e. the Bank of Maharashtra and the PunjabNational Bank. The explanation tendered by the respondent-assessee was,that the aforesaid deposits were made out of money received from the saleof lottery tickets. In so far as the assessment under reference is concerned,i.e., for the assessment year 1997-98, the respondent-assessee had not filedany return of income. The Assessing officer was of the view that incomefrom the sale of lottery tickets invested as fixed deposits in different banks,as well as, interest derived by the the respondent-assessee on the aforesaidfixed deposits had escaped assessment. A notice under section 148 of the Income Tax Act, 1961, was issued to the respondent-assessee on 22.3.2004, after getting appropriateapproval. The aforesaid notice was served on therespondent -assessee on24.3.2004. In response to the aforesaid notice, the respondent-assessee fileda return (for the assessment year 1997-98) declaring his income atRs.1,64,614/-. Statutory notices under Sections 142 and 143 of the IncomeTax Act, 1961, were issued to the respondent-assessee. His response wassough through a detailed questionnaire furnished to him. Summons werealso issued to the bankers with whom the respondent-assessee hadmaintained his fixed deposits. Summons were also issued to the RajasthanState Lotteries,Jaipur, for gathering further information on the issue. Inresponse to the questionnaire furnished to the respondent-assessee,submitted his reply. He also produced his books of account. On the basis ofthe aforesaid exercise carried out by the Assessing Officer, the AssessingOfficer arrived at the conclusion, that the respondent-assessee haddeposited Rs.6,32,3,642/- by way of fixed deposits with different banks,without satisfactorily explaining the source of the aforesaid investment.Since the Assessing Officer was not satisfied with the explanation tenderedby the respondent-assessee, the same was treated as unexplainedinvestment under Section 69 of the Income Tax Act, 1961. As such, anaddition of Rs.1,25,76,000/- was made by the Assessing Officer to theincome of the respondent-assessee. Besides the aforesaid addition, penalty proceedings were initiated against the respondent-assessee under section 271(1)(C) of theIncome Tax Act, 1961, on the ground that the respondent-assessee hadfailed to file his return of income within the postulated time. Additionally, penalty proceedings were also initiated against the respondent-assesseeunder section 271(B) of the Income Tax Act, 1961, as he had failed to gethis accounts audited. Besides the aforesaid addition, penalty proceedings were initiated against the respondent-assessee under section 271(1)(C) of theIncome Tax Act, 1961, on the ground that the respondent-assessee hadfailed to file his return of income within the postulated time. Additionally, penalty proceedings were also initiated against the respondent-assesseeunder section 271(B) of the Income Tax Act, 1961, as he had failed to gethis accounts audited. Dissatisfied with the determination rendered by the AssessingOfficer, as also penalty proceedings initiated against him, the respondent-assessee preferred an appeal before the Commissioner of Income Tax(Appeals), Faridabad. Before the aforesaid Appellate Authority, therespondent-assessee asserted that investments in the nature of fixeddeposits were made by him in different banks out of cash received fromvendors (of the lottery tickets). To substantiate his aforesaid claim, therespondent-assessee relied on a confirmation of all the vendors on plainpaper, along with affidavits of as many as 20 such vendors. In his effort torepudiate an inference being drawn against him for not producing thevendor, the contention of the respondent-assessee was, that he had closedthe said lottery business about ten years before the receipt of any notice byhim, and as such, it was impossible for him to trace the vendor. Therespondent-assessee also produced confirmation from the vendors beforethe Commissioner of Income Tax(Appeals) Faridabad, with a request thatthe same be taken on record, as additional evidence under rule 46(A) of theIncome-tax Rules, 1962. Besides pointedly relying on the aforesaidevidence, the respondent-assessee also asserted that in identicalcircumstances similar pleas raised by the respondent-assessee for theassessment year 1996-97 had been accepted, whereupon, the addition madefor the aforesaid assessment year was deleted. Having taken into consideration the factual position depictedby the assessee, as has been noticed in the foregoing paragraphs, as well as, the fact that the Assessing Officer who appeared before the Commissionerof Income Tax (Appeals) Faridabad, acknowledged, that no new facts hadbeen brought on the record for the assessment year 1997-98 (besides thematerial which had been taken into consideration in respect of an identicalcontroversy pertaining to the preceding assessment year 1996-97) as alsothe fact, that the Assessing Officer had also verified the genuiness of someof the vendors by deputing Inspectors, and had arrived at the conclusionthat the same were genuine. As also the fact that the present controversy inrespect of the assessment year 1997-98 was identical to the controversywhich was earlier adjudicated upon for the assessment year 1996-97, theCommissioner of Income Tax (Appeals) Faridabad, arrived at theconclusion that it could not be held that the FDR deposits made in the nameof the respondent-assessee valuing Rs.49,76,000/- in the Bank ofMaharashtra, and Rs.76,00,000/- in the Punjab National Bank had beenmade from out of unexplained funds. The Commissioner of Income Tax(Appeals) Faridabad, accordingly, deleted the aforesaid addition made in theincome of the respondent-assessee based thereon.. Dissatisfied with the order passed by the Commissioner ofIncome Tax (Appeals) Faridabad, dated 11.5.2006, the revenue preferred anappeal before the Income Tax Appellate Tribunal (New Delhi). For thesame reasons, as were recorded by the Commissioner of Income Tax(Appeals), the Income Tax Appellate Tribunal (New Delhi) dismissed theappeal preferred by the revenue vide an order dated 3.7.2008. The order passed by the Commissioner of Income Tax(Appeals)Faridabad and the Income Tax Appellate Tribunal (New Delhi)are subject matter of challenge through the instant appeal. Dissatisfied with the order passed by the Commissioner ofIncome Tax (Appeals) Faridabad, dated 11.5.2006, the revenue preferred anappeal before the Income Tax Appellate Tribunal (New Delhi). For thesame reasons, as were recorded by the Commissioner of Income Tax(Appeals), the Income Tax Appellate Tribunal (New Delhi) dismissed theappeal preferred by the revenue vide an order dated 3.7.2008. The order passed by the Commissioner of Income Tax(Appeals)Faridabad and the Income Tax Appellate Tribunal (New Delhi)are subject matter of challenge through the instant appeal. We have considered the submissions advanced by the appellant.In fact in their entirety, the submissions advanced on behalf of the revenueare based on the order passed by the Assessing Officer dated 24.3.2005.We have considered the aforesaid submissions advanced by thelearned counsel for the appellant. We however, find no merit therein.Firistly, it is not a matter of dispute that an identical controversy as againstthe same assessee pertaining to the assessment year 1996-97 was allowed infavour of the respondent-assessee on the same facts and circumstances, as inthe present appeal. Secondly, the respondent-assessee had producedconfirmations from all vendors on plain paper, along with affidavits of asmany as 20 such vendors affirming the transfer of funds by them to therespondent-assessee on account of sale/purchase of lottery tickets. Thirdly,his excuse for not producing the vendors for verification was that he hadclosed the instant business about a decade before the issue was raised, andas such, it was not possible for him to trace all the vendors. Fourthly, out ofthe confirmations/affidavits produced by the respondent-assesseeverification was carried out by the Assessing Officer. Same verification wasalso sought to be conducted through an Inspector of the department. Allconfirmations/affidavits which were sought to be verified were found to begenuine. Fifthly, it was acknowledged by the Assessing Officer before theCommissioner of Income (Appeals), that no new facts had been brought onthe record of the controversy pertaining to the assessment year 1997-98besides those which were taken into consideration for the assessment year1996-97. In view of the above, there is absolutely no scope forinterference with the orders passed by the Commissioner of Income Tax (Appeals) dated 11.5.2006, and the Income Tax Appellate Tribunal (NewDelhi) dated 3.7.2008. For the reasons recorded hereinabove, we find no merit in thisappeal, the same is accordingly dismissed. ( J.S.Khehar) Judge March 9, 2009 (Hemant Gupta) Judge rk