Jagjeet Singh V. Commissioner of Income Tax

ITA/31/2012

AI Insights

The case revolves around an appeal by Jagjeet Singh against the order of the Income Tax Appellate Tribunal, which had partly allowed appeals from both the revenue and the assessee concerning the assessment year 2006-07. The primary contention was the genuineness of a loan of Rs. 35,90,000 received by the assessee from his father, Shri Charan Singh. The Tribunal had found discrepancies in the bank transactions of Shri Charan Singh, including unexplained patterns of deposits and withdrawals, and noted the absence of evidence regarding agricultural operations that could substantiate the source of the loan. The High Court dismissed the appeal, agreeing with the Tribunal's findings and noting that the assessee failed to produce adequate evidence to support his claims.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 796278 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 10-07-2012
• Assessment Year: misc
• Other Referred Cases: CIT Vs. M/S Amar Chand and sons, ITA No. 243 of 2011
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: RAVISHANKAR
• Keywords: Best Judgment Assessment; Loan genuineness; Scrutiny assessment; Creditor capacity
• Section: 260A

Judgement Text

"ITA No. 31 of 2012 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 31 of 2012 Date of Decision: 10.7.2012 Jagjeet Singh ....Appellant. Versus Commissioner of Income Tax ...Respondent. CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. HON'BLE MR. JUSTICE G.S. SANDHAWALIA. PRESENT: Mr. Ravi Shankar, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 30.9.2011 passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafter referred to as “the Tribunal”) in ITA No. 864/CHD/2009 for the assessment year 2006-07, claiming the following substantial questions of law:- A. Whether under the facts and circumstances of the case, the Ld. ITAT was justified in giving two contradictory findings in respect of two creditors having same set of facts whereas credit in the case of Sh. Charan Singh should have also been upheld as genuine as held by CIT(A) whereas findings of the ITA No. 31 of 2012 -2- learned Tribunal are contradictory to the recent judgment of this Hon'ble High Court in the case of CIT Vs. M/S Amar Chand and sons, ITA No. 243 of 2011 decided on 25.11.2011, Annexure A-4? B. Whether the order of the Tribunal on the above said two grounds of this appeal is perverse and against the provisions of law? 2. Briefly stated, the facts as narrated in the appeal are that the assessee filed return of income for the assessment year 2006-07 declaring loss at Rs.1,17,070/- from the proprietorship concern. The said return was taken up for scrutiny and the best judgment assessment was made. The Assessing Officer vide order dated 30.10.2008 (Annexure A-1) rejected the claim of the assessee. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short “the CIT(A)”] who vide order dated 26.6.2009 (Annexure A-2) partly allowed the appeal. The CIT(A) deleted the addition of Rs.42,90,000/- made on account of two loans raised by the assessee from his father Shri Charan Singh and mother Smt. Sukhwinder Kaur. Against the order of the CIT(A), the revenue as well as the assessee filed appeals. The Tribunal vide order dated 30.9.2011 (Annexure P-3) partly allowed both the appeals. Hence, the present appeal by the assessee. 3. We have heard the learned counsel for the appellant. 4. The question for consideration in this appeal is whether the loan from Shri Charan Singh was genuine or not. The appellant had shown that he had received a sum of Rs.35,90,000/- from his father ITA No. 31 of 2012 -3- Shri Charan Singh. The Tribunal while adjudicating the said issue observed that the perusal of the bank account of Shri Charan Singh depicted a uniform pattern of deposits of ` 5 lacs and immediate withdrawal thereafter which had not been explained. The copy of the bank account was incomplete. The nature and source of the loan amount of ` 35,90,000/- had also not been explained. The creditor, Shri Charan Singh was not produced. Further, no evidence of agricultural operation being done by Shri Charan Singh had been brought on record. The Tribunal on appreciation of evidence, thus, had come to the conclusion that the loan shown by the appellant was not genuine. The Tribunal recorded as under:- “5. We have carefully perused the rival submissions, facts of the case and the relevant Paper Book including the findings of the AO as well as that of the CIT(A). The ld. CIT(A), has deleted the addition of Rs.42,90,000/- on account of unexplained loans received from two persons namely Mrs. Sukhwinder Kaur, W/o Shri Jagjeet Singh and Shri Charan Singh, S/o Shri Sohan Singh, both resident of House No. 1127 Sector 44-B, Chandigarh. It was contended by the Revenue that Shri Charan Singh S/o Shri Sohan Singh does not have the capacity to make such loan to the assessee. A perusal of the copy of the bank account of Shri Charan Singh clearly reveals a uniform pattern of deposits of Rs.5 lacs, on certain dates and immediate withdrawal of ITA No. 31 of 2012 -4- the same, which were not explained. The assessee has failed to explain the nature and source of the loan amount of Rs.35,90,000/- received from Shri Charan Singh. It is further added that the assessee has also received a loan of Rs.7 lacs from Mrs. Sukhwinder Kaur, during the relevant period under consideration. The assessee has filed incomplete copy of bank account while adducing evidence to justify the amount of Rs.35,90,000/- as loan received from Shri Charan Singh. The assessee also filed photo copy of acknowledgment in token of having filed the Income Tax Return by Shri Charan Singh, which were processed under summary. The Paper Book reveals that even complete bank account of Shri Charan Singh has not been filed by the assessee. The assessee also failed to produce the creditors on one pretext or the other. No proper evidence filed in respect of crop grown and sold by Shri Charan Singh, as observed by the AO. It is a legally settled proposition that identity of the creditor, capacity of the creditor and the genuineness of the transaction is required to be proved by the assessee and the onus of proving such ingredients squarely lies on the assessee. In the present case, the assessee has failed to adduce requisite evidence to prove the capacity of Shri Charan Singh, by way of ITA No. 31 of 2012 -5- cogent and corroborative evidence and genuineness of the transaction has not been established. In view of this, the decisions of the Hon'ble Supreme Court in the case of Srilekha Banerjee v. CIT, 49 ITR 112, CIT v. Durga Parsad More 82 ITR 540 and Sumati Dayal v. CIT, 214 ITR 801 are applicable. The Supreme Court in the case of CIT, West Bengal-II V. Durga Prasad More 82 ITR 540 (supra) has stated that it is true that the apparent must be considered real until it is shown that there are reasons to disbelieve and the taxing authorities are entitled to look into the surrounding circumstances to find out the matter has to be considered by applying the test of human probabilities. As per the decision of Hon'ble Supreme Court in the case of Srilekha Banerjee V CIT 49 ITR 112, the burden of proof was on the assessee which has not been discharged. In the case of Sumati Dayal V CIT (supra), the Hon'ble Supreme Court stated that the claim of the assessee winning jackpots several times was contrary to the statistical theories and experience of the frequencies and probabilities. Therefore, the findings of the CIT (A), in respect of Shri Charan Singh are reversed. To this extent, the revenue succeeds in its Ground of Appeal.” 5. The said finding was not shown to be erroneous or ITA No. 31 of 2012 -6- perverse in any manner. Further, the reliance of the learned counsel for the appellant on an order passed by this Court in ITA No. 243 of 2011 (The Commissioner of Income Tax-II, Ludhiana v. M/s Amar Chand and sons) decided on 25.11.2011 (Annexure A-4) that the loan received by the assessee therein was held to be genuine would necessarily not mean that the loan in the present case was also genuine. No benefit can be derived by the assessee in respect of the findings recorded in that case as the same depends on the facts and circumstances of each case independently. In the present case, the Tribunal on appreciation of material has come to the conclusion that the loan of ` 35,90,000/- as shown by the assessee to have been received from Shri Charan Singh was not genuine. Moreover, on 1.5.2012, learned counsel for the appellant had sought time to produce material on record to show that there were sufficient funds available with Shri Charan Singh to advance the loan to the appellant. However, nothing has been produced in this regard. 6. In view of the above, no substantial question of law arises in this appeal. Accordingly, the same is dismissed. (AJAY KUMAR MITTAL) JUDGE July 10, 2012 (G.S. SANDHAWALIA) gbs JUDGE "