The Commissioner Of Income-Tax,Jalandhar v. M/S.gian Chand Bhajan Lal, Bhathinda

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.78 of 1988Date of decision: .2.2008 The Commissioner of Income-tax,Jalandhar ......Applicant Versus M/s.Gian Chand Bhajan Lal, Bhathinda ......Respondent CORAM:-HON'BLE MR.JUSTICE SATISH KUMAR MITTALHON'BLE MR.JUSTICE RAKESH KUMAR GARG * * * Present:Mr. Sanjeev Bansal, Advocate for the applicant. * * * Rakesh Kumar Garg, J . 1.This judgment will dispose of ITR Nos.78 and 79 of 1988 arisingout of ITA Nos.269/(ASR)/1986 and ITA No.270/(ASR)/1986 for the assessmentyear 1982-83 as the common question of law and facts is involved in both thereferences. 2.Brief facts giving rise to this reference are as under:- A survey was conducted u/s 133A on the business premises of theassessee firm on 16.7.1982. During the course of survey proceedings, thebooks of account of the assessee and other documents were seized and as perletter No.1886 dated 19.7.1982 addressed to the Commissioner of Income-tax,Jalandhar through the Inspecting Assistant Commissioner of Income-tax,Bhatinda Range, Bhatinda it had been reported by the then Income-tax Officer,B-Ward, Bhatinda, who conducted the survey, that during the survey operationcertain excess stock was found and the assessee surrendered a sum ofRs.55,000/- on account of value of excess stock as compared to that of available as per books of account as income for the financial year 1981-82 relevant to theasstt. year 1982-83 voluntarily subject to no penalty u/s 271(1)( c ). 3. However, later the assessee filed returns disclosing lesser incomeas per their books and submitted letters stating that the additions of the aboveamounts had been agreed to by them under pressure, harassment and undueinfluence and the assessee had never surrendered any amount at the time ofsurvey or at any other time. In support thereof, they swore their affidavits whichwere filed along with the letters in question. 4.One of the letters written by the assessee to the Income-tax Officer,B-Ward, Bhathinda retracting from their earlier statements made at the time ofsurvey is reproduced hereinafter below:- “To The Income-tax Officer,B-Ward, Bhatinda. Sub:- Regarding M/s Gian Chand Bhajan LalCommission Agents; Bhucho Mandi Assessment year1982-83. Dear Sir, It is respectfully submitted that on16.7.1982, a survey u/s 133A was made by your honouraccompanied by other ITOs, Inspectors of theDepartment, members of the staff including certainpeons. It is further submitted that during survey nostock was verified actually. Books were complete andprofit and loss was duly prepared and profit as per bookswas duly divided among the partners of the firm.B/sheet was also duly prepared, profit and loss accountand b/sheet was duly signed by your honour. We have to say under strain thatunnecessary pressure, harassment and threats weremade to the partners present at the time of survey andtwo of the partners were forced to give in writing andwere also pressed to make entries in the closed booksafter profit and loss account as under:- “Rs.55,000/- voluntary surrender during survey asexcess stock as income for the financial year 1981-82relevant to the assessment year 1982-83 subject to nopenalty under section 271(1)(c)”. sd/- ( HARBHAJAN SINGH)INCOME-TAX OFFICER, A-WARD, BHATINDA. DATED: 16.7.1982.” The entry is not signed by any of thepartners confirming this addition. We may bring to your kind notice that wedeal in food-grains and in kachi arhat of agriculturalproduce. In this firm, little stocking of goods is beingdone. During the period under consideration, theassessee only stocked gur and cotton seeds. Thegoods are being purchased from the local arhties andsale is being made to the traders. There is no possibilityof any excess of stock as mentioned in the abovenarration, which was got under pressure and threats andwas asked to surrender Rs. 55,000/-. sd/- ( HARBHAJAN SINGH)INCOME-TAX OFFICER, A-WARD, BHATINDA. DATED: 16.7.1982.” The entry is not signed by any of thepartners confirming this addition. We may bring to your kind notice that wedeal in food-grains and in kachi arhat of agriculturalproduce. In this firm, little stocking of goods is beingdone. During the period under consideration, theassessee only stocked gur and cotton seeds. Thegoods are being purchased from the local arhties andsale is being made to the traders. There is no possibilityof any excess of stock as mentioned in the abovenarration, which was got under pressure and threats andwas asked to surrender Rs. 55,000/-. Keeping in view the above mentioned facts,it is submitted that as entry regarding surrender ofRs.55,000/- was got written under undue influence ofpower and not voluntarily, hence, we are not ready tosurrender this amount and the return is being filed as perprofit and loss a/c duly prepared and signed by yourhonour at the time of survey. Books have been kept inthe ordinary course of business and supported byvouchers, bills and other subsidiary entries. Hence thesame be accepted and the entry of surrenderingRs.55,000/- made under pressure be ignored. Thanking you, Yours faithfully, for M/s. Gian Chand, Bhajan Lal Bhucho Bhajan Lal Partner. “ 5. The ITO did not accept the pleas of the assessees and madeadditions of Rs.55,000/- and Rs.30,000/- respectively holding that no pressure or threat was ever caused by the survey party, and it had beenexpressly accepted by the assessee that they were making statementswithout any threat or pressure or harassment. These facts were given inwriting to the survey party and therein it had been clarified that theseamounts were being surrendered voluntarily without any pressure, threat orundue influence or harassment made by the survey party. It was only laterthat the assessee had backed out and set up concocted stories. 6.Appeal filed by the assessee before the Commissioner of Income-tax (Appeals) was also dismissed. The assessee/respondent filed furtherappeals before the Tribunal who came to the conclusion that the word‘surrender’ is unknown to the Income-tax law and held that there was noagreement between the ITO and the assessee for the addition of Rs.55,000/- inthe case. It was held that the authorities below committed an error in law andfacts in making and sustaining such an addition of Rs.55,000/- which wasdeleted and the appeals were allowed vide order dated 10.11.1986. 7.Feeling aggrieved against the said order of the Tribunal, the Revenuefiled applications under Section 256(1) of the Income-tax Act before the Tribunalfor referring the question of law as enumerated in the statement of case in RANo.9/(ASR)/1987 arising out of ITR No.269/(ASR)/86 and RA No.10/(ASR)/1987arising out of ITR No.270/(ASR)/1986 which are said to have arisen out of theTribunal's order dated 10.11.1986. However, the Tribunal vide its order dated29.1.1988 passed in the above referred reference applications, referred thefollowing identical question of law in both the appeals at the instance ofRevenue:- “ Whether on the facts and in the circumstances of thecase, the Tribunal was justified in deleting the additionsmade by the ITO on the basis of the proceedings takenby the survey party at the premises of the assessee andthe statements of the respective assessees recordedtherein ?.” 9.From the record of the case, it is crystal clear that the only disputebetween the parties is with regard to the fact whether the alleged surrender ofRs.55,000/- made by the assessee during the course of the survey underSection 133(A) of the Act by the revenue authorities was voluntary or onaccount of unnecessary pressure, harassment or threat made by the revenueauthorities and that the assessee had agreed to the addition of Rs.55,000/- inthe relevant assessment year voluntarily. “ Whether on the facts and in the circumstances of thecase, the Tribunal was justified in deleting the additionsmade by the ITO on the basis of the proceedings takenby the survey party at the premises of the assessee andthe statements of the respective assessees recordedtherein ?.” 9.From the record of the case, it is crystal clear that the only disputebetween the parties is with regard to the fact whether the alleged surrender ofRs.55,000/- made by the assessee during the course of the survey underSection 133(A) of the Act by the revenue authorities was voluntary or onaccount of unnecessary pressure, harassment or threat made by the revenueauthorities and that the assessee had agreed to the addition of Rs.55,000/- inthe relevant assessment year voluntarily. 10.The record shows that an entry was made in the books of accountsof the assessee for Rs.55,000/- voluntary surrendered during the survey asexcess stock as income for the financial year 1981-82 relevant to theassessment year 1982-83, subject to no penalty under Section 271(I)(c ). Thisentry is not proved to have been made in the hands of either of the partners or ofthe I.T.O. It is not made by the I.T.O. as it is merely seen by the I.T.O.Therefore, the entry made as it shows has not been proved. Thus, on this soleground, the addition made accounting to Rs.55,000/- is bad in law. 11.To our mind, the question referred to by the Tribunal is a questionof fact and no question of law is involved referable for the opinion of this Court inthe present case. Admittedly, there is no evidence on record to prove thecontention of the revenue to the effect that the assessee hadsurrendered/agreed for making an addition of Rs.55,000/-. Admittedly, in thecase in hand the entry in the account books of the assessee, shows that theassessee has surrendered the amount but the said entry has not been signed bythe assessee though the same has been signed by the ITO written therein thathe has seen it. Thus, the said entry cannot be deemed to have been made bythe assessee voluntarily only on the basis of the alleged statement of the partnerrecorded on 16.7.1982. Even otherwise, the Tribunal while allowing the appealsvide order dated 14.11.1986 has given a finding of fact that there is noagreement between the ITO and the assessee for the addition of Rs.55,000/- inthis case. challengeable before this Court unless such finding is shown to be perverse onthe basis of material evidence on the record of the case. In the present case,there is no such material on the basis of which it can be argued that thefindings of fact arrived at by the Tribunal are perverse resulting into miscarriageof justice to the revenue. Hence, both the references are answered in favour ofassessee in the affirmative and against the revenue. 13. Both the references stand disposed of accordingly. (RAKESH KUMAR GARG) JUDGE February , 2008ps (SATISH KUMAR MITTAL) JUDGE IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITR No.79 of 1988Date of decision: .2.2008 The Commissioner of Income-tax,Jalandhar......Applicant Versus M/s.Kahna Mal Duni ChandBhathinda ......Respondent CORAM:-HON'BLE MR.JUSTICE SATISH KUMAR MITTALHON'BLE MR.JUSTICE RAKESH KUMAR GARG Present: * * * Mr. Sanjeev Bansal, Advocate for the applicant. * * * Rakesh Kumar Garg, J . Disposed of in view of judgement of even date passed in ITR No.78 of 1988. (RAKESH KUMAR GARG) JUDGE February , 2008ps (SATISH KUMAR MITTAL) JUDGE