SHRI PREM CHAWLA V. COMMISSIONER OF INCOME TAX 1

ITA/19/2016

AI Insights

Shri Prem Chawla, the appellant, challenged the orders of the Income Tax Appellate Tribunal and the Commissioner of Income Tax, which had dismissed his previous appeals regarding the income tax assessments for the years 2001 to 2006-07. The core issue was whether M/s. D. K. Traders, under which certain unrecorded sales were made, was a separate entity or a benami concern of the appellant. The authorities concluded that M/s. D. K. Traders was controlled by the appellant, as evidenced by the operation of bank accounts and the lack of independent documentation proving otherwise. The court dismissed the appeal, supporting the findings of the lower authorities.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 746898 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 08-07-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: SAPAN USRETHE
• Assessee Lawyers: A P SHRIVASTAVA
• Keywords: Bank accounts; Benami concern; Dummy Concern; Income Tax; Search and seizure; Seized documents
• Section: 132; 133A; 292; 260-A; 132(4)(A)

Judgement Text

"ITA-19-2016 (SHRI PREM CHAWLA Vs COMMISSIONER OF INCOME TAX 1) 08-07-2016 Shri A. P. Shrivastava, learned counsel for the appellant. Shri Sapan Usrethe, learned counsel for the respondent. Heard on the question of admission. The appellant has filed this appeal under Section 260-A of the Income Tax Act, 1961 in respect of year 2003-2004 against the order dated 21.08.2015 passed by the Income Tax Appellate Tribunal and also against the order of Commissioner of Income Tax dated 11.10.2012. Appellant had filed near about seven appeals and all the appeals were dismissed by the Income Tax Appellate Tribunal. Appellant proposed admission of the appeal on the following substantial questions of law : 1. Whether the burden on proving benami is on the person making such claim, and therefore, the Department should have proved that M/s. D. K. Traders is a benami concern of the appellant ? 2. Whether on the facts and in the circumstances of the case, whether the id ITAT was not justified in holding that M/s. D. K. Traders is a benami concern of the appellant; when the impounded document BF-30 was not found from the premises of the appellant ? 3. Whether on the facts and in the circumstances of the case, whether the id ITAT was not justified in holding that M/s. D. K. Traders is a benami concern of the appellant; moreso whether bank, neighbors, accountant, and appellant had accepted the owner of the concern was Shri Shubhashish Paul; and no positive material was brough on record to establish benami; therefore the findings of id ITAT is perverse ? 4. Whether the id lower authorities were justified in confirming the additional, without giving copy of statement recorded of Mr. S. D. Mishra and without affording cross-examination of same? 5. Whether on the facts and in the circumstances of the case, whether addition shall be made for the entire sale proceeds or only net profit could be added to the income of the appellant ? Appellant was engaged in the business of manufacturing and sale of industrial solvents and thinners in the brand name of \"A„nand\". He was proprietor of M/s. Anand Industries which was manufacturing and selling wall putty, adhesive and industrial paints. Search and seizure operations u/s 132 as well as survey operations u/s 133A of Income Tax Act were conducted at the residential and business premises of the appellant. A notice was issued to the appellant. He submitted his reply. During search certain documents i. e. three register BF-29, BF-30 & BF-31 were seized. The sales were made by the assessee in the name of M/s D. K. Traders, which were not recorded in the regular books of accounts of the appellant. The money of sales was deposited in the bank accounts operated by the appellant in the name of D. K. Traders. The accounts were opened with Dena Bank and Pubnjab National Bank. The total amount deposited during financial years 1999-00 to 2005-06 was of Rs.1,25,74,805/-. The authority found that the appellant fraudulently opened the accounts in the name of D. K. Traders and there was no document showing that D. K. Traders was separate identity and held that deposits were from the income of the appellant of the assessment year 2001 to 2006-07 and income was added in the income of the appellant and tax liability was fixed. Against the aforesaid order appellant submitted an appeal before the Commissioner that was dismissed and thereafter an appeal was filed before the Income Tax Appellate Tribunal, that has also been dismissed. All the authorities have held that D. K. Traders was not a separate identity and it was a dummy concern controlled by the appellant and appellant operated the bank accounts of D. K. Traders. Detail reasons have been assigned by the authorities in arriving at the aforesaid findings. Learned counsel for the appellant has submitted that registers were seized from the premises of the mother of the appellant who had carrying separate business. Hence inference cannot be drawn against the appellant. It is further submitted by the appellant that search was not taken place at the residence of the appellant. We are not in agreement with the arguments advanced by the learned counsel for the appellant. The Income Tax Appellate Tribunal has considered the provisions of Section 132 (4) (A) and 292 of of the Income Tax Act and recorded following findings : \"These books have been written by Shri Ram Prakash Dwivedi who was also an accountant of the assessee. After going through the reply of Shri Ram Prakash Dwivedi while cross-examining him which has been reproduced by the learned CIT (A), it is clearly discernible that M/s. D. K. Traders was not a separate concern belonging to some other person or controlled by any other person but it belongs to the assessee and the transaction recorded in BF-30 belongs to the assessee. In view of these various various cumulative factors and surroundings circumstances, we hold that the transactions recorded in BF-30 are belonging to the assessee has failed to produce sufficient evidence to rebut the presumption as per various clauses of Income Tax Act, therefore, we hold that the learned CIT (A) was justified in sustaining the addition. We confirm the order of the learned CIT (A).\" These findings are the findings of facts given by the authorities of the Income Tax and Income Tax Appellate Tribunal. Hence, in our opinion no substantial question of law involves for admission of appeal, we do not find any merit in this appeal. It is hereby dismissed. (S.K. GANGELE) JUDGE (ASHOK KUMAR JOSHI) JUDGE kkc "