COMMISSIONER OF INCOME TAX III LUDHIANA V. GURLAL SINGH GREWAL

ITA/297/2012

AI Insights

The case revolves around an appeal by the Commissioner of Income Tax-III, Ludhiana against Sh. Gurlal Singh Grewal concerning the assessment year 2006-07. The primary issue was the addition of \'67,96,725 to the assessee's income, which the Assessing Officer (AO) claimed was unexplained investment. This addition was based on a document recovered during a survey, which the assessee initially attempted to destroy but later reconstructed. The Income Tax Appellate Tribunal (Tribunal) found that the document did not conclusively represent any financial transactions and criticized the Revenue for not conducting further inquiries post-survey. The High Court of Punjab and Haryana dismissed the appeal, agreeing with the Tribunal's findings and emphasizing that the Revenue's arguments were based on presumptions rather than facts.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 718691 (HC-CHANDIGARH)
• Appeal Type: Others
• Pronouncement Date: 29-01-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Assessee Lawyers: RAJESH KATOCH
• Keywords: Document Destruction; Mens Rea; Survey; Unexplained investment; Legal burden of proof
• Section: 260-A

Judgement Text

"ITA No. 297 of 2012 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: January 29, 2013 ITA No.297 of 2012 (O&M) The Commissioner of Income Tax-III, Ludhiana …Appellant Versus Sh. Gurlal Singh Grewal, 655 Gurdev Nagar, Ludhiana. …Respondents CORAM: HON'BLE MR. JUSTICE HEMANT GUPTA HON’BLE MS. JUSTICE RITU BAHRI Present: Mr. Rajesh Katoch, Advocate for the appellant. 1 To be referred to the Reporters or not? 2 Whether the Judgment should be reported in the Digest HEMANT GUPTA, J. (Oral) The present appeal under Section 260-A of the Income Tax Act, 1961 (for short 'the Act') is directed against order dated 29.08.2012 passed by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short the Tribunal) pertaining to assessment year 2006-07. The Revenue has claimed the following substantial questions of law: “i) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is justified in disallowing the addition of ` 67,96,725/- (` 64,00,000/- + 3,96,725/- int.) made by the AO on account of unexplained investment by ignoring the fact that the assessee failed to discharge the onus of proof that noting contained on the piece of paper did ITA No. 297 of 2012 (O&M) -2- not relate to any transaction. ii) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal is justified in disallowing the addition made by the AO by ignoring the facts that destroying the paper in question which was reproduced later on, establishes mens rea on the part of the assessee to destroy the evidence against him.” The entire claim of the Revenue is based upon the paper recovered during survey on 22.02.2006. The assessee earlier sought to destroy the said paper, but later it was re- constructed. The Tribunal has returned a finding that the said document does not show anything and it is very difficult to say that the document represents certain loans given by the assessee to various persons. The Tribunal has also returned a finding that after discovery of the document during survey, the Revenue should have either obtained further information or in any case should have conducted more enquiries to prove the contents of the document and that without such enquiry or any material on record, it is not possible to return a finding that the figures are in terms of lakhs and lead to addition to income. We have asked learned counsel for the appellant to explain that the entries so recorded relate to transaction of money. It is argued that conduct of the assessee during the course of survey would cause inference that assessee was hiding transaction when he tried to destroy the paper. The argument is based upon presumption and not on fact. Therefore, in view of the finding of fact recorded by the Tribunal that the paper does not lead to any transaction of money, we do not find ITA No. 297 of 2012 (O&M) -3- that any substantial question of law arises for consideration of this court. Dismissed. (HEMANT GUPTA) JUDGE (RITU BAHRI) JUDGE 29.01.2013 Atul/Vimal "