Income Tax Appeal No. 64 of 2010 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 64 of 2010 Date of decision: 19.4.2011 M/s. Aggarwal Financers, Ladwa through its partner, Rajinder Pal Gupta --- Appellant Versus Commissioner of Income Tax, Karnal and another --- Respondents CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Mr. Sandeep Goyal, Advocate for the appellant. Mr. Yogesh Putney, Senior Standing Counsel for the respondent. --- AJAY KUMAR MITTAL, J. 1. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the appellant-assessee against the order dated 3.12.2008 passed by the Income Tax Appellate Tribunal Chandigarh Bench (SMC Bench) Chandigarh (in short “the Tribunal”) in ITA No. 103/Chandi/2003, relating to the assessment year 1998-99. Income Tax Appeal No. 64 of 2010 2 2. The following substantial questions of law have been claimed for determination of this Court: “ (i) Whether in the facts and circumstances of present case, the action of the authorities below in rejecting the advances of Rs. 1,97,000/- made to the appellant- assessee by the creditors, is legally sustainable in the eyes of law, even when appropriate explanation with regard to the same being legal was aptly provided to the Assessing Officer? (ii) Whether under the facts and circumstances of the present case, the action of the authorities below in making addition qua the advances, by rejecting the transactions made through cheque is legally sustainable in the eyes of law? (iii) Whether under the facts and circumstances of the present case, the action of the authorities below in making addition qua the advances, by rejecting the transactions even when corroborated by the creditors themselves through their statements and affidavits, is legally sustainable in the eyes of law? (iv) Whether under the facts and circumstances of the present case, the action of the authorities below in making addition qua the advances, by rejecting the transactions made through cheque, is legally sustainable in the eyes of law? (v) Whether under the facts and circumstances of the present case, the action of the authorities below in Income Tax Appeal No. 64 of 2010 3 making additions merely on the basis of presumptions, is legally sustainable in the eyes of law? (vi) Whether under the facts and circumstances of the present case, the action of the authorities below in making additions even when the genuineness of the transactions was fully explained by the appellant- assessee, thereby discharging its onus, is legally sustainable in the eyes of law? 3. The facts, in brief, necessary for adjudication as narrated in the appeal, are that the appellant-assessee is a partnership firm engaged in the financial activities and is earning interest from the parties. The assessee filed its return of income for the assessment year 1998-99, on 31.10.1998, declaring income of Rs. 6,889/-. The assessing officer, however, made assessment under Section 148 of the Act. Certain short-comings and deficiencies were detected by the assessing officer in the return filed. Accordingly, the assessing officer noticed that the deposits made by the creditors of the assessee as shown in the books of account were not genuine, inasmuch as no confirmation and verification had been furnished by the assessee and, thus, made an addition of Rs. 1,97,000/-. The assessing officer also disallowed 1/4th of the actual expenses of Rs. 67,767/- and further added a sum of Rs. 16,942/-, vide order dated 1.12.2000. 4. Appeal filed by the assessee before the Commissioner of Income-tax (Appeals) {in short “the CIT(A)”}, was partly allowed vide order dated 29.11.2002. The CIT(A) deleted the addition of Rs. 16,942/- that had been made owing to disallowance of 1/4th of the actual expenses of Rs. 67,767/-. The CIT(A), however, sustained the Income Tax Appeal No. 64 of 2010 4 addition of Rs. 1,97,000/- made by the assessing officer. The assessing officer vide order dated 24.12.2004 had imposed penalty amounting to Rs. 68,949/- for concealment of income under Section 271(1)(c) of the Act. Appeal was dismissed by the CIT(A) on 24.8.2005 affirming the penalty imposed by the assessing officer. 5. Not satisfied with the order of the CIT(A), the assessee preferred two appeals before the Tribunal. One appeal was filed challenging that part of the order whereby the CIT(A) confirmed the addition of Rs. 1,97,000/- pertaining to the credits of various parties shown in the books of the assessee, under Section 68 of the Act. The second appeal was filed raising a plea that the CIT(A) was not justified in not deleting the penalty of Rs. 68,949/- under Section 271 (1)(c) of the Act. The Tribunal vide order dated 23.12.2008 dismissed the appeals and this led to the filing of the instant appeal at the instance of the assessee. By the impugned order levy of penalty under Section 271(1)(c) of the Act was also upheld by the Tribunal. The assessee filed Income Tax Appeal No. 65 of 2010 against the order of the Tribunal sustaining levy of penalty under Section 271(1)(c) of the Act. The said appeal has been dismissed by us vide separate order passed today. 6. In this appeal, the assessee has challenged the order of the authorities below whereby its plea that the advances amounting to Rs.1,97,000/- made by the creditors were genuine, was not accepted. 7. The Tribunal while upholding the findings of the assessing officer which were affirmed by the CIT(A) holding that the Income Tax Appeal No. 64 of 2010 5 deposits made by the creditors amounting to Rs. 1,97,000/- were not genuine, had recorded as under: “We have considered the rival submissions and perused the material available on the file. Brief facts are that the assessee is a partnership firm engaged in the financial activities and is earning interest from the parties. The Assessing Officer found that there were certain credit entries standing to the credit of the assessee from various parties. The Assessing Officer specially asked the assessee to furnish the confirmation of deposits of these credits which were not furnished by the assessee. Admittedly, the assessee filed the copy of account of S/Shri Subhash Chand, Basesar Dayal from whom the amount of Rs. 50,000/- and Rs. 18,000/-, respectively were shown to be received through cheque. But no such confirmations were filed by these concerned persons, consequently the amounts were added to the income of the assessee. In the case of Shri Sachin Kumar for credit of Rs. 36,000/- neither the confirmation nor any copy of account was filed. Identical situation was in the case of Smt. Kiran Bala, Shri Banarsi Dass and Shri Ram Gopal, consequently, the addition of Rs. 1,97,000/- was made on account of these credits u/s 68 of the Act. On appeal, the assessment order was upheld which is under challenge before the Tribunal. As far as the contention that proper opportunity was not provided to the assessee, we are not agreeing with Income Tax Appeal No. 64 of 2010 6 the argument because even during assessment proceedings opportunities were provided and the assessee did not file the requisite details in spite of the fact that the case was adjourned on various dates for filing such confirmation / details. Even before the Ld. First Appellate Authority, Shri Vinay Goyal, C.A. appeared. Since the assessee did not file requisite details and no specific infirmity has been pin pointed in the impugned order, the same is upheld. Even otherwise, the burden is on the assessee to prove the source of receipt. For the proposition, we are supported by the decision in the case of Roshan Di Hatti vs. CIT (107 ITR 938) (SC) and also in the case of Kalekhan Mohammad Hanif vs. CIT (50 ITR 1) (SC). Reliance can also be placed in the case of Additional CIT Vs. Bahri Bros. (154 ITR 244) (Pat.) In the light of the facts and judicial pronouncements, the stand of the Ld. CIT(A) is upheld. Consequently, this ground of the assessee is dismissed.” 8. The aforesaid findings whereby the advances made by the creditors were held to be not genuine have not been shown as erroneous or perverse in any manner. Accordingly, no substantial question of law arises in this appeal and the same is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) April 19, 2011 JUDGE *rkmalik* Income Tax Appeal No. 64 of 2010 7