Gian Chand Jain V. Income Tax Officer Hry Salary cum Coy Ward Chandigarh

ITA/52/2002

AI Insights

The case involves Gian Chand Jain, the proprietor of M/s Jain Electric and Hardware Store, who appealed against the decision of the Income Tax Appellate Tribunal, Chandigarh. The Tribunal had upheld the additions made by the assessing officer to the appellant's income for the assessment year 1992-93, which included amounts from squared up accounts and unsecured loans treated as income from undisclosed sources. The main legal issues revolved around the interpretation of Section 68 of the Income Tax Act, 1961, concerning the genuineness of the cash credits and the procedural fairness in not allowing the appellant to produce the creditors for verification.

• Counselvise Citation: [2010] 140 COUNSELVISE.COM (IT) 812717 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 14-07-2010
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: YOGESH PUTNEY
• Assessee Lawyers: PANKAJ JAIN
• Keywords: Assessment Year 1992-93; Cash Credits; Income from undisclosed sources; Unsecured loans
• Section: 143(3); 68; 260

Judgement Text

"1 - . 52 2002 Income tax Appeal No of IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ----- - . 52 2002 Income Tax Appeal No of : 14.7.2010 Date of decision , . / . Gian Chand Jain Proprietor M s Jain Electric and Hardware Store Panchkula --- Appellant Versus , . - - , , . Income Tax Officer Hry Salary cum Coy Ward Chandigarh --- Respondent --- : . CORAM HON’BLE MR JUSTICE ADARSH KUMAR GOEL . HON’BLE MR JUSTICE AJAY KUMAR MITTAL --- : PRESENT . , Mr Pankaj Jain Advocate . for the appellant . , Mr Yogesh Putney Senior Standing - . Counsel for the respondent Department --- 2 - . 52 2002 Income tax Appeal No of , . AJAY KUMAR MITTAL J The assessee has approached this Court under 260- - , 1961 ( “ Section A of the Income tax Act in short the ) Act’ and has prayed that the following substantial questions , of law arise in this appeal for the consideration of this Court - , from the order of the Income tax Appellate Tribunal , ( “ ) Chandigarh Bench Chandigarh for short the Tribunal” 17.9.2001, - . passed on in Income tax Appeal No 1096/ /1994 1992-93: CHD for the assessment year 1- Whether under the facts and circumstances of the case ITAT was justified in law by upholding the squared up accounts of Deepak Chadha for a loan . 9,500/-, . 9,000/-, of Rs Pardeep Kumar Rs . 9,000/- . Som Nath Rs and Darshan Singh Rs 6,000/- as income from undisclosed sources of the appellant only on the basis that the appellant . has not produced them before the ld Assessing . Authority 3 - . 52 2002 Income tax Appeal No of 2- , That on the facts and circumstances of the case whether ITAT was justified in law by interpreting 68 - the provisions of Section of the Income Tax , 1961 . Act in maintaining the addition of Rs 1,08,500/- on account of various unsecured loan as mentioned in the order against each person as . assessee’s income from undisclosed sources ” The assessee filed return for the assessment 1992-93 . 18,850/-. year declaring an income of Rs The , , 143(3) , assessment after scrutiny under Section of the Act . 2,56,010/-, was finally concluded at an income of Rs vide 24.2.1994. , , order dated The assessing officer amongst others made addition in declared income on account of squared up , , account of Deepak Chadha Pardeep Kumar Som Nath and . , Darshan Singh Besides this an addition on account of unexplained cash credit on account of unsecured loans . 1,08,500/- amounting to Rs was also made under Section 68 . of the Act The assessee carried appeal before the - ( ) [( “ ( )] . Commissioner of Income tax Appeals for short CIT A ” . The appeal was partly allowed The assessee still took up 4 - . 52 2002 Income tax Appeal No of . , matter before the Tribunal The Tribunal as well concurred with the findings of the authorities below and consequently , - - dismissed the assessee’s appeal in so far as the challenge , 17.9.2001. on the above count is concerned vide order dated .1 Regarding Question No . The issue that arises for consideration in this Court , - is whether the squared up cash credits in the names of four , , , , persons namely Deepak Chadha Pardeep Kumar Som Nath , . 9,500/-, 9,000/-, and Darshan Singh amounting to Rs 9,000/- 6,000/- and respectively were to be treated as genuine and could not form part of the assessee’s income . , from undisclosed sources The assessing officer while , considering the genuineness of the above amounts observed that the assessee had not produced the said persons to prove the genuineness of the unsecured loans and , . . consequently added the aforesaid four amounts i e total . 33,500/- . amount of Rs to the income of the assessee - ( ) The appellant assessee contended before the CIT A that no sufficient opportunity was provided to it to produce aforesaid , , four persons for verification and thus the addition of 5 - . 52 2002 Income tax Appeal No of - squared up accounts and unsecured loans treated as . ( ), unexplained cash credits was not justified The CIT A while , upholding the finding of the assessing officer recorded as : under “2.4. I have carefully examined the rival . submissions After examination of the assessment , records maintained by the AO I find that the facts . stated by the appellant are not correct In fact the -2 facts stated by the AO in para of his . 23.12.1993, assessment order are correct On the appellant had categorically stated before the AO as : under “ Shri Deepak Chadha and Shri Pardeep , , Kumar are not traceable and therefore cannot be . , produced As regards Shri Jarnail Singh and . Suman Jain seek time to produce ” 4.1.1994 . . , Again on Shri G C Jain himself along : with his counsel stated before the AO as under “ , that following persons are not traceable and , : therefore cannot be produced 6 - . 52 2002 Income tax Appeal No of - i . Sh Som Nath - ii . Sh Darshan Singh” 2.5 , 4 Therefore all the above said creditors were never produced by the appellant and in fact he had categorically stated that they were . untraceable When as per assessee’s own , admission these creditors were untraceable it was not just possible to give their latest addresses and no such addresses were ever given by the . , appellant to the AO Therefore I have no hesitation in holding that the appellant had neither proved the identity nor the capacity of these creditors nor the factum of actual passing of cash . was proved The AO had correctly involved the 68 provisions of section and added this amount of . 33,500/- . Rs to the income of the appellant This , , . addition is therefore upheld ” The above finding was affirmed by the . Tribunal in the appeal preferred by the assessee Learned counsel for the assessee has now sought to challenge the 7 - . 52 2002 Income tax Appeal No of - said finding on the ground that the non production of the above four persons could not be a ground for treating the . income to be from undisclosed sources of the assessee In , . our view the contention does not carry any weight This is a finding of fact recorded by the authorities below that the cash credits were not genuine and it was to be treated as . income of the assessee from undisclosed sources Once the assessee was unable to produce those persons from whom , he had shown the above squared up cash credits the inference drawn by the authorities below cannot be said to be . perverse .2. Regarding Question No , Now adverting to the second question whether the assessing officer was right in treating the unsecured loan to 68 various persons as unexplained cash credits under Section ? , of the Act The Tribunal while upholding the finding of the ( ) , :- CIT A in this regard recorded as under “ I have gone through the submissions advanced on . behalf of the assessee It is strange that most of . 19,000/- the creditors have given loans of Rs to 8 - . 52 2002 Income tax Appeal No of . the assessee This obviously has been done to 269 hoodwink the provisions of section SS of - Income tax Act which prohibits receipt of cash . 20,000/- . . . deposit of Rs or more The A O and , ( ) on appeal the CIT A have held that these creditors had no capacity to advance loans to the . assessee This conclusion has been reached after examining source of income of the creditors and . their family status In reaching the above conclusion all relevant and material facts have been taken into . account I have nothing before me to take a view . contrary to the one taken by the lower authorities , Therefore these cash credits cannot be treated as . provided in accordance with law The Revenue authorities were justified in treating cash credits as . assessee’s income from undisclosed sources In , the same way they were fully justified in not . 14,000/- accepting addition of Rs to the capital . account of the assessee as genuine The amount was introduced from an undisclosed source and 9 - . 52 2002 Income tax Appeal No of . was rightly added to the income of the assessee , , Thus additions referred to above were rightly . . ( ). made by the A O and confirmed by the CIT A I agree with them and uphold their orders on these . credits ” The above again being a finding of fact , against which no misreading could be shown no interference . is called for by this Court Learned counsel for the appellant - made an unsuccessful attempt to persuade this Court to re appreciate the evidence and record a finding in favour of the . assessee We are not inclined to accede to the submission . - , made by the counsel Re appraisal of evidence without , reference to any material which had been misread does not 260- . fall within the domain of Section A of the Act No substantial question of law arises in this appeal , , for consideration of this Court and the appeal is therefore . dismissed ( ) AJAY KUMAR MITTAL JUDGE 10 - . 52 2002 Income tax Appeal No of ( ADARSH KUMAR ) GOEL 14, 2010 July JUDGE * * rkmalik "