COMMISSIONER OF INCOME TAX-I LUDHIANA V. M/S JODHA RAM TARLOK CHAND

ITA/54/2013

AI Insights

The case involves the Commissioner of Income Tax-I, Ludhiana as the appellant and M/s Jodha Ram Tarlok Chand, Ludhiana as the respondent. The dispute centered on the addition of `30,00,000 to the assessee's income for the assessment year 2008-09, which was claimed to be unexplained cash deposits in a CC account. The Assessing Officer initially added this amount to the income based on information from the Annual Information Return (AIR). However, the CIT(A) deleted this addition after the assessee provided explanations and evidence during the appellate proceedings. The ITAT upheld the CIT(A)'s decision, leading to the Revenue's appeal in the High Court under Section 260 A of the Income Tax Act, 1961.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 678504 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 22-05-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961, Income Tax Rules, 1962
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: RAJESH KATOCH
• Keywords: Assessment Year; Commissioner of Income Tax (Appeals); Income tax appellate tribunal; Unexplained Cash Deposits; CC account
• Section: 143(3); 46A(2); 260-A

Judgement Text

"ITA No. 54 of 2013 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: May 22, 2013 ITA No. 54 of 2013 (O&M) Commissioner of Income Tax-I, Ludhiana …Appellant Versus M/s Jodha Ram Tarlok Chand, Ludhiana …Respondent CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON’BLE MS. JUSTICE RITU BAHRI Present: - Mr. Rajesh Katoch, Advocate, for the appellant. HEMANT GUPTA, J. (ORAL) The Revenue is in appeal under Section 260 A of the Income Tax Act, 1961 against an order passed by the Income Tax Appellate Tribunal, Chandigarh Bench 'B', Chandigarh on 25.09.2012 in respect of the assessment year 2008-09. The Revenue has claimed the following substantial questions of law: i) Whether Hon'ble ITAT was justified in confirming the order of Ld. CIT (A) who deleted the entire addition of ` 30,00,00/- made on account of unexplained cash deposits in CC account? ii) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in conforming the finding of the CIT(A) that assessee had explained credit entry of cash deposit in the CC account by presuming that assessee had produced the books of account to explain the entries on the basis of proceeds from the counter sale, in the contrary CIT (A) has conveniently ignored the candid finding of Assessing Officer that the assessee has not explained the source of cash deposits along with proof, as status by Assessing Officer in para-5 of the assessment order dated 13.12.2010? Kumar Vimal 2013.05.27 16:21 I attest to the accuracy and integrity of this document Chandigarh ITA No. 54 of 2013 (O&M) -2- iii) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in upholding the order of CIT (A) and ignoring that for the first time during the course of appellate proceedings before CIT(A) the alleged explanation of credit entries in the CC account was attempted to be explained by the assessee on the basis of proceeds from the counter sales meaning thereby that the additional evidence in shape of explanation of credit entries was first time furnished before the CIT(A) and the same (Additional evidence) was not forwarded to give opportunity of its verification by Assessing Officer as it ought to have been being additional evidence as envisaged under Rule 46A(2)? iv) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in holding the order of the CIT(A) ignoring the violation of Rule 46A(2) by CIT(A), as the CIT(A) did not send the additional evidence to the Assessing Officer while sending the letter dated 08.07.2011 to seek the comment of Assessing Officer, instead CIT (A) pointed out two specific issues without forwarding the additional evidence where for the first time cash deposits of CC account was attempted to be explained in the form of proceeds from the counter sales? v) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in ignoring the finding recorded by the assessing officer in para 5 of the assessment order dated 13.12.2010, where Assessing Officer has clearly stated that assessee did not cooperate during assessment proceeding instead he was questioning / contesting the correctness of AIR information of deposit being in CC account instead of saving account, which clearly establishes beyond doubt that assessee neither had intention to explain the entries / nor attempted to explain the credit entries during assessment Kumar Vimal 2013.05.27 16:21 I attest to the accuracy and integrity of this document Chandigarh ITA No. 54 of 2013 (O&M) -3- proceedings and the attempt to explain the same was made for the first time before CIT(A) in the shape of Additional evidence? vi) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was correct in law as well as in the circumstances of the case as the order of ITAT is erroneous and perverse in as much as that ITAT has failed to appreciate the ground taken by the revenue that CIT(A) has not complied with the spirit and intent of Rule 46A(2) and disposed the ground summarily without appreciating the fact of the case that CIT(A) had never forwarded the additional evidence to Assessing officer where the assessee for the first time attempt to explain the cash deposit in CC account was made by assessee? vii) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in upholding the order of the Ld. CIT(A), ignoring the fact that order of CIT(A) was perverse and erroneous as it has been passed by ignoring the provisions contained in the Rule 46A(2) of I.T. Rule by not recording the mandatory reason for admitting the additional evidence, as the assessee for the first instance attempted to explain the deposit before CIT(A)? viii) Whether on the facts and in law, the Hon'ble Income Tax Appellate Tribunal was justified in confirming the order of CIT(A) ignoring that law of natural justice has not been followed as Assessing Officer has not been given the opportunity of being heard that in which one of the four criteria laid down under Rule 46A(2) the assessee's case fall, so that Revenue being effected party in the instant case may be able to rebut the arguments taken by the appellant before the CIT(A)?” The assessee filed its return on 08.10.2008 declaring total income of ` 23,69,300/-. The return was taken up for Kumar Vimal 2013.05.27 16:21 I attest to the accuracy and integrity of this document Chandigarh ITA No. 54 of 2013 (O&M) -4- assessment in terms of Section 143(3) of the Income Tax Act, 1961 (for short 'the Act'). During the course of assessment, on the basis of Annual Information Return (AIR), the cash credit entries amounting to ` 30 lacs was found to be unexplained and consequently added to the income of the assessee. In an appeal filed by the assessee, learned Commissioner of Income Tax (Appeals) found that the assessee has current account with HDFC Bank and that the entries to the extent of ` 1.33 crores in cash have been explained by the assessee on the basis of counter sales as recorded in the books of account. In view of the said fact, the finding of the Assessing Officer that AIR information constitutes primary evidence was found to be wrong and consequently, the addition made by the Assessing Officer was deleted. In further appeal, the arguments raised by the revenue were that the assessee has failed to give source of deposit in the saving account, therefore, the addition made by the Assessing Officer is justified and also that the appeal filed by the assessee has been decided in violation of Rule 46A(2) of the Income Tax Rules, 1962 (for short 'the Rules). The Tribunal found that the Commissioner of Income Tax (Appeals) forwarded the submissions made by the appellant to the Assessing Officer for his comments and further sought comments on the assertion of the assessee that it maintains only Current Account with HDFC Bank, wherein ` 1.30 crores including ` 30 lacs in cash have been deposited. A certificate filed by the assessee from HDFC Bank certifying that the assessee had no Saving Account, was also sent to the Assessing Officer for his Kumar Vimal 2013.05.27 16:21 I attest to the accuracy and integrity of this document Chandigarh ITA No. 54 of 2013 (O&M) -5- comments. The Assessing Officer did not offer any comments on the specific issue raised but relied upon the importance of information received by the Assessing Officer through AIR in support of addition made. Learned Tribunal found that the Commissioner of Income Tax (Appeals) has provided opportunity to the Assessing Officer before admitting the additional evidence, therefore, the argument raised that the order of the Commissioner of Income Tax (Appeals) is contrary to Rule 46A (2) of the Rules, is not tenable. Though the revenue has claimed large number of questions as substantial questions of law for the opinion of this court, but we find that the issue lies is in narrow compass. The entry of ` 30,00,000 is on account of counter sales reflected in the current account of the assessee. The assessee has explained the nature of such transaction in appeal. The Commissioner of Income Tax (Appeals) has taken into consideration additional evidence after providing opportunity to the revenue. The Commissioner of Income Tax (Appeals) has returned a finding that the assessee has explained the counter sales to the extent of ` 1.33 crores which is inclusive of sale of ` 30 lacs. We find that such finding is a finding of fact which does not give rise to any substantial question of law. Consequently, the appeal is dismissed. (HEMANT GUPTA) JUDGE 22.05.2013 (RITU BAHRI) Atul/Vimal JUDGE Kumar Vimal 2013.05.27 16:21 I attest to the accuracy and integrity of this document Chandigarh "