ITA No. 195 of 2011 (O&M) -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 195 of 2011 (O&M) Date of Decision: 14.7.2011 Vallabh Yarns Pvt. Ltd. ....Appellant. Versus Commissioner of Income Tax, Ludhiana ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL, ACTING CHIEF JUSTICE. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. Rishab Kapoor, Advocate for the appellant. AJAY KUMAR MITTAL, J. 1. This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 28.4.2010 passed by the Income Tax Appellate Tribunal, Chandigarh, Bench 'B' (hereinafter referred to as “the Tribunal”) in ITA No. 79/CHD/2010, relating to the assessment year 2006-07, claiming the following substantial question of law:- “Whether on the true and correct interpretation of the provisions of sections 145 and 80-IB, the finding are sustainable for charging the Income from Undisclosed Sources attributable to discharge of “onus” assigned on the assessee whereas the ITA No. 195 of 2011 (O&M) -2- decision of another Hon'ble High Court places the “onus on the revenue”?” 2. Put shortly, the facts necessary for adjudication as narrated in the appeal are that the assessee-company, is a trader, manufacturer of knitted cloth and readymade garments. It filed its return on 29.11.2006 for the assessment year 2006-07 at a total income of Rs.84,49,800/-. A survey was conducted under Section 133A of the Act at the business premises of the assessee and the assessee surrendered additional income of Rs.44,00,000/-. The assessee claimed deduction under Section 80-IB of the Act to the tune of Rs.35,91,572/-. The Assessing Officer completed the assessment vide order dated 8.12.2008 at an amount of Rs.1,19,17,850/-. The deduction of Rs.1,23,519/- was allowed under Section 80-IB of the Act against deduction claimed at Rs.35,91,572/- by the assessee. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short “the CIT(A)”] who vide order dated 11.11.2009 upheld the aforesaid disallowance. Still feeling dissatisfied, the assessee filed an appeal before the Tribunal. The Tribunal vide order dated 28.4.2010 upheld the order of the CIT(A) denying the claim under Section 80-IB of the Act on surrendered income. This gave rise to the assessee to approach this Court by way of instant appeal. 3. We have heard learned counsel for the appellant. 4. The Tribunal while deciding the issue against the assessee had recorded that the undisclosed income which was surrendered by the assessee during the course of survey under Section 133A of the Act did not relate to business income which could be held to be derived ITA No. 195 of 2011 (O&M) -3- from eligible industrial undertaking. Once that is so, the assessee was rightly held not entitled to claim deduction under Section 80-IB of the Act on the said amount. The relevant findings recorded by the Tribunal read thus:- “Although, the assessee has pleaded that the additional income is on account of realization of sundry debtors and this to our mind is also suspect. In this connection, we may refer to the letter of surrender dated 10.11.2005, which has been adverted to by the learned counsel during the course of hearing, to support the submissions. The contents of the surrender letter read as under: “Please refer to the survey proceedings conducted u/s 133A of the Income Tax Act today at our business premises at Rahon Road and Sunder Nagar, Ludhiana. During survey proceedings, some discrepancies and certain paper sheet entries were found which could not be explained at that moment. However, in order to buy peace and to avoid any litigation with the department with respect to the explanation of such discrepancies and paper sheet entries, we hereby offer for taxation an additional income of Rs.44 lacs from business in the hands of the company for the assessment year 2006-2007 ITA No. 195 of 2011 (O&M) -4- subject to no penalty or prosecution under any provisions of the Income Tax Act to cover all discrepancies or unexplained entries. The Income Tax due on the above amount shall be paid on or before the due date of payment of advance tax for the assessment year 2006-2007.” A perusal of the aforesaid demonstrates that all what the assessee had offered as additional income is stated to be earned 'from business'. Apart from the aforesaid, there is no material or evidence led by the assessee to demonstrate the nature of income surrendered. In any case, the plea of the assessee that the surrendered income is by way of realization of debtors is unsubstantiated. Even if it is accepted that the additional income surrendered is to be regarded as business income, there cannot be any presumption that the same is eligible for the benefits u/s 80-IB of the Act because it is further required to be established that such business income is derived from the eligible Industrial Undertaking following the parity of reasoning in the case of M/s Sterling Foods (supra). Quite clearly, there is no material to establish the same and, therefore, we find no error in the approach of the income tax authorities in denying deduction u/s 80-IB of the Act on an amount of Rs.44 ITA No. 195 of 2011 (O&M) -5- lacs surrendered by the assessee as additional income consequent to survey u/s 133A of the Act.” 5. No perversity or illegality in the findings recorded by the Tribunal could be pointed out by the learned counsel for the assessee which may raise any substantial question of law in this appeal for consideration of this Court. Accordingly, the appeal is dismissed. 6. Since the appeal has been dismissed on merits, no further orders are required to be passed on the applications for condonation of delay in filing and refiling the appeal and the same are disposed of as such. (AJAY KUMAR MITTAL) JUDGE July 14, 2011 (ADARSH KUMAR GOEL) gbs ACTING CHIEF JUSTICE