Income Tax Appeal No. 161 of 2005 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 161 of 2005 Date of decision: 31.3.2011 The Commissioner of Income Tax Bathinda --- Appellant Versus Karaj Singh --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Ms. Savita Saxsena, Standing Counsel for the appellant-Revenue. Ms. Radhika Suri, Advocate for the respondent. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the Revenue against the order dated 2.11.2004, passed by the Income Tax Appellate Tribunal Amritsar Bench, Amritsar (in short “the Tribunal”) in ITA No. 60/ASR/2000, relating to the assessment year 1992-93. 2. The appeal was admitted for determination of the following substantial question of law by this Court: “Whether the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar was right in deleting the addition made u/s 68 on Income Tax Appeal No. 161 of 2005 2 account of unexplained cash credit to the tune of Rs. 1,50,000/-“ 3. The facts, in brief, necessary for adjudication as narrated in the appeal, are that the assessee filed return for the assessment year 1992-93 on 22.4.1993 declaring income at Rs. 66,090/-. On a complaint received, the matter was investigated and it was found that the assessee had introduced his own secret funds to the tune of Rs. 1,50,000/- through one Naresh Kapoor who first deposited that money in his account opened in the name of M/s. City Enterprises, Jalandhar and later on got prepared a bank draft in the name of the assess on the pretext of foreign remittance and same was given to the assessee. Subsequently, proceedings under Section 147 of the Act were issued and notice under Section 148 of the Act was issued to the assessee on 10.7.1996 and in response to which the assessee filed return on 27.1.1997 declaring an income of Rs. 66,086/-. The assessment under Section 143(3) read with Section 147 of the Act was completed on 30.12.1998 and consequently the assessing officer vide order dated 30.12.1998 made an addition of Rs. 1,50,000/- by invoking provisions of Section 68 of the Act. 4. Appeal carried by the assessee against the order of the assessing officer was dismissed by the Commissioner of Income-tax (Appeals) {in short “the CIT(A)”}, vide order dated 15.11.1999. Appeal of the assessee was, however, allowed by the Tribunal vide order dated 2.11.2004 whereby the addition made by the assessing officer and sustained by the CIT(A) was deleted. 5. We have heard learned counsel for the parties and have perused the record. Income Tax Appeal No. 161 of 2005 3 6. Learned counsel for the appellant-Revenue submitted that the Tribunal had erred in reversing the findings of the CIT(A) whereby it had been held that the amount of Rs. 1,50,000/- which was received by the assessee by way of an account payee’s cheque on 28.11.1991 was a genuine transaction. 7. Controverting the submission of the learned counsel for the Revenue, learned counsel for the assessee submitted that in identical cases of other assesses, namely, Mohan Singh and Parminder Singh, the Tribunal had decided the same issue, vide order dated 26.5.2003 in favour of the assessee and the said order having become final, the findings recorded by the Tribunal in the present case did not warrant interference by this Court. It was pointed out that as per circular of the Board relating to filing of bills under Section 268A of the Act at the relevant time of filing of the appeal, the limit prescribed by Board of Direct Taxes was two lacs whereas the quantum of addition as claimed by the Revenue was Rs.1.50,000/- and taking the tax effect thereon the same would not qualify under the instructions issued by the Board. 8. We have given our thoughtful consideration to the submissions made by the counsel for the parties. 9. Learned counsel for the Revenue wanted to point out that the decision in the cases of Mohan Singh and Parminder Singh, on which reliance had been placed by the Tribunal holding them to be identical cases, no appeal had been filed challenging the findings recorded therein. The Tribunal, on the basis of material on record, came to the conclusion that the amount of Rs. 1.50,000/- which was received by the assessee from Naresh Kaoor had been repaid to him within a period of 15 days and the said transaction was a bona fide transaction and the provisions of Income Tax Appeal No. 161 of 2005 4 Section 68A were not attracted. At this stage, it would be advantageous to refer to the findings recorded by the Tribunal which read thus: “After considering the rival submissions and perusing the relevant material on record, it is noted as a factual position that the amount of Rs. 1,50,000/- was received by the assessee by way of A/c payee cheque on 28.11.1991 and was repaid within a period of less than 15 days through banking channel. The transaction having been opened and closed through bank draft within the short span of 15 days cannot be held to be ingenuine unless any specific material is brought on record, which goes against it. Simply because Shri Naresh Kapoor could not be produced before the AO, cannot lead to the confirmation of addition u/s 68. It is axiomatic that impossible cannot be complied with. Newspaper cuttings duly establish that Shri Naresh Kapoor was absconding and in our considered opinion his physical production before the AO could not have complied with. It is found that the transactions with Shri Naresh Kapoor in identical circumstances became subject matter of adjudication before the Chandigarh Bench in the case of ITO vs. Shri Mohan Singh, Ludhiana, in ITA No. 373/Chandi/2000 and Shri Parminder Singh, Ludhiana Vs. ITO, Ward-II(9), Ludhiana in ITA No. 51/Chandigarh/2000 & 43/Chandi/2000, order dated 26.5.2003 and the Tribunal held the assessee’s contention in those cases. Respectfully following the precedents, we overturn the impugned order on this score.” Income Tax Appeal No. 161 of 2005 5 10. In view of the above, the substantial question of law is answered against the Revenue and in favour of the assessee. 11. Since the appeals has been decided on merits, the question of maintainability of appeal in terms of quantum involved under Section 268-A of the Act has been left open. 12. In view of the above, the appeal is dismissed. (AJAY KUMAR MITTAL) JUDGE (ADARSH KUMAR GOEL) March 31, 2011 JUDGE *rkmalik*