ITA No. 448 of 2006 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 448 of 2006 Date of Decision: 3.12.2010 Jatinder Pal Singh Dua ....Appellant. Versus Commissioner of Income Tax-I, Jalandhar ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. G.R. Sethi, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. This appeal was admitted by this Court vide order dated 19.2.2007 for determination of the following substantial question of law:- “Whether on the facts and in the circumstances of the case was there any material and legal basis to hold the explanation of the assessee under Section 69 of the Income Tax Act, 1961, not satisfactory when the availability of the cash amount with the proprietary business, namely, Dua Plastic Industries, was not disputed and cash withdrawals of Rs.1.5 lacs from Punjab and Sind Bank, New Grain Market, Jalandhar, much prior to the filing of the return was not questioned and whether the findings were ITA No. 448 of 2006 -2- perverse?” 2. Briefly stated the facts for adjudication as narrated in the appeal are that the assessee filed his return on 29.10.2001 for the assessment year 2001-02 declaring an income of Rs.85,825/- along with Trading-cum-Profit and Loss Account and balance sheet and capital account with the Dua Plastic Industries. The assessee purchased a plot for Rs.4.50 lacs vide agreement dated 19.6.2000. The said amount was invested from the cash balance of business of Dua Plastic Industries by putting a dasti slip in the cash box and recouped the said amount by withdrawing Rs.1.5 lacs from Account No.6423 with Punjab and Sind Bank, Jalandhar. The Assessing Officer made an addition of Rs.1.5 lacs as investment from undisclosed sources. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short “the CIT(A)”] who vide order dated 18.3.2005 affirmed the said addition of Rs.1.5 lacs. On further appeal, the Tribunal vide order dated 17.2.2006 upheld the view of the Assessing Officer as well as the CIT (A). Hence, the present appeal by the assessee. 3. We have heard learned counsel for the assessee. 4. Learned counsel for the assessee-appellant submitted that the provisions of Section 69 of the Act had not been complied with and, therefore, the addition could not be sustained on that account. He argued that there should have been independent finding and no conclusion should have been drawn only on the basis of missing entries in the books of accounts. The finding recorded by the authorities though concurrent are vitiated as the same are based on violation of the ITA No. 448 of 2006 -3- aforesaid legal plea. He placed reliance upon the judgments of the Hon'ble Supreme Court in Roshan Di Hatti v. Commissioner of Income Tax, Delhi, [1977] 107 ITR 938, Commissioner of Income- Tax v. Smt. P.K. Noorjahan [1999] 237 ITR 570 and of the Gujarat High Court in Mitesh Rolling Mills P. Ltd. v. Commissioner of Income-Tax, [2002] 258 ITR 278. 5. We have given our thoughtful consideration to the submission made by the learned counsel for the assessee and are not impressed with the same. 6. Ordinarily, if a person makes an investment during the financial year, it must be either from his current income or his savings from earlier income or through loan or otherwise receipt from some other person. Section 69 of the Act creates a fiction whereby if such person does not advance any reasonable explanation for the source of investment which can be accepted, the only conclusion that can be drawn is that the amount in question has been earned in the said financial year. 7. It is well settled that wherever a receipt is sought to be taxed as income, the Department is required to prove that the same falls within the taxing provision, and where the receipt is in the nature of an income, the burden lies on the assessee to show that it is not taxable as it falls within the purview of exemption provided by the Act. However, under Section 69 of the Act, where the source of investment is not satisfactorily explained by the assessee, the Assessing Officer may treat the amount of investment as the income of the assessee. The Assessing Officer is empowered to exercise such discretion ITA No. 448 of 2006 -4- judiciously keeping in view the facts and circumstances of each particular case. 8. Applying the aforesaid principles to the facts of the present case, it may be noticed that the assessee had shown an investment of Rs.1,50,000/- on 19.6.2000 by way of a bank draft for the purchase of plot. There was no material to substantiate that the said amount was from declared sources. The solitary explanation offered by the assessee was that an amount of Rs.1,50,000/- was available with M/s Dua Plastics Industries on 19.6.2000 from where he had taken the amount after putting a “Note of Paper slip” showing withdrawal of Rs.1,50,000/- from the said firm. However, no entry was made and later on Rs.1,50,000/- was withdrawn by him from the bank account on 19.10.2000, i.e. after expiry of 4 months period from the date of draft given for purchase of plot on 19.6.2000 and paid back to the firm. The assessee could not substantiate this stand as there was no entry in the books of account of M/s Dua Plastic Industries showing advancing of such amount to the assessee on 19.6.2000. The mere availability of cash with M/s Dua Plastic Industries without any entry regarding withdrawal of Rs.1,50,000/- in the books of accounts does not help the assessee. In the absence of an entry in the books of accounts of Dua Plastics Industries on 19.6.2000 regarding withdrawal of Rs.1,50,000/- by the assessee, the only inference that can be drawn is that the assessee as an after though has sought to tender a strange explanation without any legal justification. 9. The Tribunal while affirming the findings of the Assessing Officer and CIT(A) had noticed as under:- ITA No. 448 of 2006 -5- “8.4. I have heard both the parties and carefully considered the rival submissions with reference to facts, evidence and material on record. There is no dispute about the fact that the plot was purchased on 19.06.2000 and the payment was made on the same day through a bank draft. The assessee has no explanation to support his contention that the amount of Rs.1.50 lac was withdrawn from the proprietary concern. If this was the case, nothing prevented the assessee in making entry in the books of account. Thus, the contention of the assessee is not supported by any evidence. Moreover, the amount of Rs.1.50 lacs was withdrawn from the bank account on 19.10.2000 i.e. after a period of 4 months from the date when payment was made for purchase of plot. Again there is no entry in the books of account showing return of such amount. Therefore, in the absence of any evidence submitted before the authorities below or even before the undersigned, I am of the opinion that the learned CIT(A) was justified in sustaining the impugned addition. As regards the decision of the ITAT, Amritsar Bench, Amritsar, in the case of M/s Tirath Automobiles Vs. ITO (supra), the same is distinguishable on facts. In that case the assessee had purchased two bank drafts of 22nd May, 1987 and 12th March, 1989 and there was sufficient cash available in the books of account of the assessee. However, entries in the cash book were made on the next date i.e. 23rd May, 1987 ITA No. 448 of 2006 -6- and 13th March, 1989 respectively. Therefore, the Tribunal held that the delay of one day in making an entry in the books of account when there was sufficient cash available would not justify any addition on this account. But in the present case, no entry has been made in the books of account either on the withdrawal or on refund of Rs.1.50 lac. Therefore, this decision is not applicable to the facts of the present case. Thus, the order of the CIT (A) is upheld and this ground of appeal is dismissed.” 10. The finding of fact has not been shown to be perverse. It could not be demonstrated that the approach of the Assessing Officer, affirmed by the CIT (A) and the Tribunal, is erroneous or perverse in any manner. 11. Reference is now made to judgments relied upon by the learned counsel for the assessee. The principles of law enunciated in these judgments are well recognized. However, they do not advance the case of the assessee as in the present case, no satisfactory explanation has been offered by the assessee to explain the source of Rs.1,50,000/- used in the preparation of draft on 19.6.2000 for the purchase of plot and the same had been rightly treated as unexplained investment of the assessee under Section 69 of the Act during the assessment year in question. All the three authorities below after appreciation of the material on record have come to the conclusion that the transaction was never recorded in the books of accounts and the assessee was not able to furnish any satisfactory explanation to show that the demand draft for Rs.1,50,000/- prepared on 19.6.2000 was ITA No. 448 of 2006 -7- from disclosed sources. 12. In view of the above, the substantial question of law is answered against the assessee. The appeal is accordingly dismissed. (AJAY KUMAR MITTAL) JUDGE December 3, 2010 (ADARSH KUMAR GOEL) gbs JUDGE