IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.R. No. 20 of 2002 DATE OF DECISION: FEBRUARY 04, 2008 The Commissioner of Income-tax, Jalandhar .....PETITIONER Versus Shri Subhash Sobti C/o M/s. Emm Ess Sales Corporation, Jalandhar ....RESPONDENT CORAM: HON'BLE MR.JUSTICE SATISH KUMAR MITTAL HON'BLE MR.JUSTICE RAKESH KUMAR GARG --- Present: Mr. Sanjiv Bansal, Advocate, for the revenue. .. SATISH KUMAR MITTAL, J. At the instance of revenue, the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as `the ITAT') has referred the following substantial question of law for the opinion of this Court which is stated to have been arising out of the order dated 26.02.1997 passed in ITA No.79 (ASR)/1991 in case of the assessee for the Assessment Year 1981-82:- “Whether, on the facts and in the circumstances of the case, the Ld. ITAT is right in law in upholding the order of the ld. CIT(A) who deleted the addition of Rs.91,884/- made by the A.O. on account of unexplained investment in purchase of 650 equity shares of M/s. Angoora Wool Combers Pvt. Ltd. @ Rs.8/- as against the market value of Rs.149.36?” In the present case, the assessee filed its return of income on 29.08.1981 declaring an income of Rs.9,660/- which was accepted under Section 143(1) of the Income Tax Act (hereinafter referred to as `the Act'). Subsequent to that assessment, an information was received from the Assistant Director of Inspection (INT), office of the Commissioner of I.T.R. No. 20 of 2002 -2- Income -tax (Central), Ludhiana that in the course of search and seizure operation carried out at the residential premises of Shri J.C. Gupta and his family members certain incriminating documents were found and seized which indicated under statement of the cost of shares of M/s. Angoora Wool Combers sold to the family members of Nagesh Hosiery Mills (Ludhiana Group) with which the assessee was closely related and had purchased 650 shares at the cost of Rs.8/- per share on 02.01.1981, whereas the market value of those shares was more. Accordingly, notice under Section 148 of the Act was issued by the Assessing Officer, Jalandhar to the assessee on 14.10.1986. In response to the said notice, a return was filed by the assessee showing the share income of Rs.9,660/- on 22.12.1986. Thereafter, the Assessing Officer issued notice under Section 143(2) of the Act to the assessee. In response to the notice, the assessee replied that he had purchased shares @ Rs.8/- per share and had made the payment by cheque drawing the same from his saving bank Account, and that he had not made any other payment except the said payment. It was stated that the said notice was issued by the Assessing Officer only on the basis of a statement made by a third person which could not have been relied upon. The contention of the assessee was not accepted and the Assessing Officer made the addition of Rs.91,884/- in the hands of the assessee as income from other sources while taking the value of the purchased shares @ Rs.149.36 per share. Feeling aggrieved against the above order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), Jalandhar, who vide its order dated 4.10.1990 allowed the appeal and deleted the addition of Rs.91,884/- made by the Assessing Officer while observing as I.T.R. No. 20 of 2002 -3- under:- “Similar issue was raised in the case of Shri Dharam Paul of Nagesh Hosiery Mills, Ludhiana, which came up for consideration before the I.T.A.T. Chandigarh Bench, in ITA No.175(CHD)/1986 for the asstt. year 1981-82 who upheld the order of the CIT(A) deleting the addition in the case of Shri Dharam Paul under similar circumstances. Following this, there is no justification for the addition in the case of the appellant. The addition is, therefore, deleted.” Being not satisfied with the order of the Commissioner of Income Tax (Appeals), the revenue sought the reference for consideration of opinion on the aforesaid question by this Court. It has not been disputed that the similar issue was raised by the revenue in case of Shri Dharam Paul of Nagesh Hosiery Mills, Ludhiana, which came up for consideration before ITAT, Chandigarh in ITA No. 175(CHD)/1986 for the Assessment Year 1981-82. In that case, the value of the shares of M/s. Angoora Wool Combers Pvt. Ltd. was held to be @ Rs.8/- per share and the addition made by the Assessing Officer in case of the assessee pertaining to the higher value was deleted and the order passed by the Commissioner of Income Tax (Appeals) was upheld by the ITAT. The said order became final. In view of the said fact, once the value of the shares of M/s. Angoora Wool Combers Pvt. Ltd. was held to be @ Rs.8/- per share in the connected case, we do not find that in this reference the substantial question of law, as referred to by the revenue, is arising from the order passed by the ITAT. Hence, the reference is answered against the revenue and in favour of the assessee. Disposed of accordingly. (SATISH KUMAR MITTAL) JUDGE February 04, 2008 (RAKESH KUMAR GARG) I.T.R. No. 20 of 2002 -4- vkg JUDGE