Income Tax Appeal No. 977 of 2008 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ---- Income Tax Appeal No. 977 of 2008 Date of decision: 8.11.2010 Lajpat Rai --- Appellant Versus Commissioner of Income tax Patiala --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL ---- PRESENT:Mr. Pankaj Jain, Advocate for the appellant. Mr. Yogesh Putney, Central Govt. Standing counsel for the respondent-Revenue. ---- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-tax Act, 1961 (for short “the Act’”) has been filed by the assessee against the order dated 31.10.2007, passed by the Income Tax Appellate Tribunal, Chandigarh Bench “A”, Chandigarh (in short “the Tribunal”) in ITA (SS) No. 36/CHANDI/2001, relating to block period 1.4.1988 to 22.9.1998 The assessee has claimed the following substantial questions of law for determination by this Court: Income Tax Appeal No. 977 of 2008 2 1- Whether the Tribunal order is sustainable in making the addition of Rs. 3,50,000/- on account of investment in Indira Vikas Patra and Kisan Vikas Patra when no such IVPs and KVPs were found during the course of search and without proving any corresponding income? 2- Whether the assessee be granted the benefit of telescoping of the additions sustained in the unexplained income? In brief, the facts necessary for adjudication as narrated in the appeal are that the assessee is engaged in the business of commission agency and having the interest limited to the extent of commission only. On 22.9.1998, a search operation was carried on the residential and business premises of the assessee under Section 132(1) of the Act, and pursuant thereto a notice under Section 158BC was served on him. Assessment was framed vide order dated 29.9.2000, Annexure A-1, wherein the assessing authority worked out the undisclosed income at Rs. 54,71,306/- and made additions on various counts, but the assessee disputed only the addition made on account of estimation of income from Kisan Vikas Patras for the assessment years 1997-98, 1998-99, 1999-2000 (up to 22.9.1998) and regarding the adhoc addition of Rs. 3,50,000/- . Aggrieved by the order, Annexure A-1, the assessee filed appeal before the Commissioner of Income Tax (Appeals), [hereinafter referred to as “the CIT(A)”]. The CIT(A) on appeal carried by the assessee observed that the assessee had failed to explain the source of the investment, confirmed the addition of Rs. 3,50,000/- as Income Tax Appeal No. 977 of 2008 3 against the addition of Rs. 17,00,000/- made by the assessing officer, vide order dated 27.3.2001, Annexure A-2. The assessee still dissatisfied assailed the order of the CIT(A) before the Tribunal. The Tribunal dismissed the appeal against the order of the CIT(A), vide order under appeal. We have heard learned counsel for the parties and perused the record. The only point that arises for consideration in the appeal relates to addition of Rs. 3,50,000/- made on account of investment in Indira Vikas Patras and Kisan Vikas Patras. The CIT(A) while sustaining the addition of Rs. 3,50,000/- as unexplained investment in these instruments had in para 7.3 of its order observed as under: “7.3 Regarding the transactions which were purchased by the assessee’s agriculturist clients by withdrawing money from assessee’s books of account, the Assessing Officer has absolutely no case as he did not bring absolutely anything to hang on his conclusion that it was actually the assessee to whom this investment actually belonged. For one thing, the I.T. Department was not able to find these IVPs in the possession of the assessee during the search operations although the I.T. Department was also not able to find even those IVPs worth Rs. 5,00,000/- where even the assessee’s books of account showed the investment. Secondly, various agriculturists clients of the assessee had exact withdrawals on the same dates from assessee’s books of account including even the seized Income Tax Appeal No. 977 of 2008 4 books of account. Thirdly, they owned up these IVPs and the Assessing Officer could not bring anything on record to doubt their claim in the statements recorded by him. Under the circumstances, the additions made by the Assessing Officer in regard to the investments in these IVPs/ KVPs where the assessee could show to whom the investment actually belonged are deleted. However, in regard to following investments, the assessee has not been able to give any explanation. Date Date of investment IVPs/KVP s A.Y,. Amount 7.10.2000 31.12.1993 KVPs 94-95 100000 7.12.1999 7.6.1994 KVPs 95-96 20000 30.6.1999 7.4.1995 KVPs 96-97 100000 15.10.200 0 15.4.1995 KVPs 96-97 130000 350000 The assessee here cannot claim that the addition has been made on the basis of a paper which gives no details because the details given in the paper have been authenticated by his explanation in regard to other transactions. The assessee also cannot claim that these KVPs were not discovered during the search at the premises of the assessee because the I.T. Department could not find even the KVPs worth Rs. 5,00,000/- which are shown to have been purchased even as per assessee's own books of account because assessee’s books of account show investments worth Rs. 12,50,000/- in the purchase of IVPs and KVPs whereas Income Tax Appeal No. 977 of 2008 5 during the search IVPs worth 5,50,000/- and KVPs worth Rs. 2,50,000/- only were discovered. Under the circumstances for the failure of the assessee to explain the source of these investments, the addition of Rs. 3,50,000/- out of total of Rs. 17,00,000/- made by the Assessing Officer is confirmed. The Assessing Officer is also directed to restrict the addition worked out by him on account of interest earned on these undisclosed investments of Rs. 3,50,000/-.” The aforesaid findings were affirmed by the Tribunal vide order under appeal. The findings of the Tribunal read thus: “Now in-so-far as the addition of Rs. 3.50 lacs sustained by the Ld. CIT(A) is concerned, herein also we are satisfied that the order of Ld. CIT(A) is fair and proper. The Ld. CIT(A) as is evident from the perusal of para 7.3 of his order, had concluded that no explanation has been furnished by the assessee on this aspect. The findings and the reasoning recorded by the Ld. CIT(A) which we have extracted in the earlier part of this order, in our view are reasonable and deserve to be confirmed. We hereby confirm the same. The assessee, therefore, fails on its ground.” Learned counsel for the assessee was unable to point out that the findings concurrently recorded by the CIT(A) and the Tribunal while sustaining the addition of Rs. 3,50,000/- was erroneous or perverse in any manner. Only an effort was made by the counsel for re-appreciation of evidence by this Court which is not within the ambit Income Tax Appeal No. 977 of 2008 6 of Section 260A of the Act. It is evident from the record that the assessee was not able to furnish any explanation for investments under reference and, therefore, the appellate authorities below took a plausible view in the matter and sustained the addition of the aforesaid amount. . In view of the above no substantial question of law arises in this appeal. Accordingly, finding no merit in the appeal, the same is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) November 8, 2010 JUDGE *rkmalik*