SYED IQBAL CHISTY V. COMMISSIONER OF INCOME TAX

ITA/25/2005

AI Insights

The case revolves around an income tax appeal by Shri Syed Iqbal Chisty against the Commissioner of Income Tax, Ajmer. The primary contention was regarding the addition of Rs.93,000 to the appellant's income under Section 68 of the Income Tax Act, 1961, which pertains to unexplained cash credits. The appellant argued that he did not maintain books of account and his income sources were limited to Khadimgiri, a form of income from religious offerings. The tribunal had partly allowed the appeal but sustained the addition, which led to the appellant challenging this decision in the High Court. The court examined whether the invocation of Section 68 was appropriate given the appellant's circumstances and the lack of business income or maintained accounts.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 762443 (HC-RAJASTHAN)
• Appeal Type: Others
• Pronouncement Date: 08-12-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: PARINITOO JAIN
• Assessee Lawyers: PRIYESH KASLIWAL
• Keywords: Addition; Assessment; Books of account; Income Tax; Investment in property; Sundry creditors; Khadimgiri
• Section: 148; 142(1); 143(2); 68; 69

Judgement Text

"1 IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR. D.B. Income Tax appeal No.25/2005 Shri Syed Iqbal Chisty Vs. CIT, Ajmer DATE OF JUDGMENT ::: 8.12.2016 HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE DINESH MEHTA Mr. Priyesh Kasliwal for Mr. P.K. Kasliwal, for the appellant. Ms. Parinitoo Jain, for the respondent. BY THE COURT:- (Per Hon'ble Jhaveri, J.) 1. By way of this appeal, the appellant has challenged the judgment and order of the trubunal whereby trubunal has partly allowed the appeal of the assessee. 2. While admitting the appeal this court on 10.1.2006 had framed following substantial questions of law:- \"Whether, the Tribunal was justified in sustaining the addition of Rs.93,000/- u/s.68 of the I.T. Act, 1961, irrespective of the fact that the appellant is not maintaining any books of account and source of income is only from Khadimgiri, such addition is legally sustainable ? Whether, addition u/s.68 of the I.T. Act, 1961, can be made, if the appellant is having no business income and not maintaining books of account and the Tribunal was further justified in sustaining the additon of Rs.93,000/- u/s.68 of the Act, irrespective of the fact that appellant is having source of income from Khadimgiri only?\" 3. The brief facts of the case are that return of income was filed in this case on 18th September, 1998 in response to 2 notice u/s 148 declaring total income at Rs.15,000/-. Notices u/s 143(2) alongwith a query letter was issued and served upon the assessee, fixing the date of hearing on 20th November, 1998. However, instead of attending the office in person and to produce necessary details/information required for completing the assessment, the assessee submitted written reply at the Dak Counter on 19th November, 1998 through M/s O.P. Maheshwari & Co. C.As. 3.1 In this case, action u/s. 147 was initiated by issue of notice u/s. 148 on 7.6.1996 requiring the assessee to file the return of income and it explanin the source of investment in purchase of house property No. 54/4 (42/63) Kamani Gate, Indercote, Ajmer. The assessee had purchased ground floor of the above house and the purchase consideration was shown at Rs.1,15,000/- plus expenses of Rs. 15,155/- incurred on stamp duty, etc. as per the copy of Registered Deed placed on file. As per the copy of Capital a/c and Balance Sheet as on 31.3.1989 furnished alongwith the return of income, besides current years income from Khadimpur at Rs. 15,000/-, the capital balance brought forward has been shown at Rs.61,000/- and the receipt of gift during the year has been shown at Rs.20,000/-. In the Balance Sheet, besides capital of Rs. 90,000/- sundry creditors has been shown at Rs. 73,000/-. In his written reply filed on 19th November, 1998 as stated above, the assessee has stated that he has already been assessed for 3 the A.Y. 1995-96 and that the return for 1995-96 has been filed in compliance with notice u/s. 142(1) which has already been accepted and that completed details and course of investment in property have already been submitted. It is further stated that now at this stage it is not possible to produce thereafter a lapse of 9 years or more. With regard to the genuineness of sundry creditors, it is stated that the genuineness of Sundry Creditors is automatically proved from the payment made to them from time to time since 1989 as shown in the Balance-Sheet as on 31.3.1995 which reduced to Rs. 3,000/- only. It is further stated that as the income is much below Rs. 50,000/-. He has not maintained day-to-day accounts for such petty gifts received as nazrana from pilgrims but used to visit Dargah Shariff for Ziyarat. With regard to the copy of Bank a/c. It is stated that he has asked the Bank to issue duplicate passbook, as the original is not traceable. 4. However, the addtion which was added by the AO u/s 68 was not deleted. 5. Counsel for the appellant Mr. Kasliwal contended that when it was an admitted case of the department that assessee did not maintain books of account, then invoking of Section 68 is contrary. In the alternative it was contended that even if they wanted to invoke Section 69, no such order was passed. The CIT(A) has observed that Section 69 should have been invoked. According to us the Appellate Authority 4 could not improve the case of the Assessing Officer, in an appeal preferred by the assessee. The Tribunal has committed an error of law in not considering this aspect of the matter. 6. Counsel for the respondent contended that the view taken by the tribunal is just and proper. No interefence is called for. 7. We have heard counsel for the parties. 8. Taking into consideration the fact that books of account is not maintained under Section 68 of the Act, the addition made is contrary of law. 9. The issue is answered in favour of the assessee and against the Department. 10. The appeal Stands allowed. (Dinesh Mehta), J. (K.S. Jhaveri), J. Brijesh "