ITA No. 461 of 2010 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 461 of 2010 Date of Decision: 28.9.2010 Sunder Chhabra, Prop. M/s Sanitary Sales ....Appellant. Versus Deputy Commissioner of Income Tax ...Respondent. CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL. HON'BLE MR. JUSTICE AJAY KUMAR MITTAL. PRESENT: Mr. K.L. Goyal, Senior Advocate with Mr. Sandeep Goyal, 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 30.10.2009 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as “the Tribunal”) in ITA N. 351(ASR)/2009 for the assessment year 2006-07 proposing following substantial question of law:- “Whether on the facts and circumstances of the case, the Ld. Tribunal was justified in upholding the addition of Rs.1,74,140/- on account of unsecured loans even though the creditors have confirmed the same along with bank statement and source being with them?” ITA No. 461 of 2010 -2- 2. Put shortly, the facts as narrated in the appeal are that the assessee filed its return for the assessment year in question on 26.10.2006 showing an income of Rs.13,60,026/- on which the tax was paid. During the course of assessment, the Assessing Officer disallowed unsecured loan of Rs.73,145/- obtained from Smt. Rosy wife of the assessee and Rs.1,02,745/- from Shri Sanjeev Kumar, HUF. The Assessing Officer made an addition of Rs.3,80,364/- and assessed the total income at Rs.17,40,390/-. Feeling aggrieved, the assessee took the matter in appeal and the Commissioner of Income Tax (Appeals) [in short “the CIT (A)”] sustained the addition of Rs.1,74,140/- under Section 68 of the Act and partly accepted the appeal vide order dated 12.6.2009. On further appeal by the assessee, the Tribunal partly allowed the appeal on other grounds and had sustained the addition for the loans received by the assessee under Section 68 of the Act. Hence, the present appeal by the assessee. 3. We have heard learned counsel for the appellant. 4. The assessee is aggrieved by the addition of Rs.1,74,140/- made by the Assessing Officer, upheld by the CIT (A) and affirmed by the Tribunal on account of unexplained cash credit. The Assessing Officer while making the said addition had recorded as under:- “4. The assessee has introduced, inter alia, an amount of Rs.73,145/- as new unsecured loan from his wife, Smt. Rosy Chhabra, as under:- Rs.53,145/- on 16.03.2006 Rs.20,000/- on 17.03.2006 The copy of bank account of Smt. Rosy Chhabra ITA No. 461 of 2010 -3- revealed that these amounts were advanced out of a credit entry of Rs.73,170/- in her bank account on 13.03.2006. Further enquiries about the source of Rs.73,170/- revealed that this amount was allegedly received by her from some commodity transactions through M/s S.P. Scripts Ltd., Ludhiana. The detail of the alleged transactions through M/s S.P. Scripts, Ludhiana has been noticed as under:- Name of the commodity Date of purchase shown Amount of purchase shown Date of sale shown Amount of sale shown Profit shown Crude Oil 03.02.2006 2,74,200/- 08.03.2006 2,98,000/- 23,800/- TUR 04.02.2006 3,59,000/- 09.03.2006 3,97,400/- 38,400/- Gwar Seed 03.02.2006 1,65,800/- 10.03.2006 1,76,770/- 10,970/- 73,170/- 4.1 Similarly the assessee introduced an amount of Rs.1 lac from Sh. Sanjeev Kumar HUF on 18.03.2006. Sh. Sanjeev Kumar is assessee's first cousin. The copy of bank account of Sh. Sanjeev Kumar HUF revealed that this amount was advanced out of a credit entry of Rs.1,02,745/- in his bank account on 16.03.2006. Further enquiries about the source of Rs.1,02,745/- revealed that this amount was also allegedly received by him from some commodity transactions through M/s S.P. Scripts Ltd., Ludhiana. The detail of the alleged transactions through M/s S.P. Scripts, Ludhiana has been noticed as under:- ITA No. 461 of 2010 -4- Name of the commodity Date of purchase shown Amount of purchase shown Date of sale shown Amount of sale shown Profit shown Gold 07.02.2006 7,93,300/- 13.03.2006 8,16,125/- 22,825/- Ref. Soy Oil 04.02.2006 3,32,400/- 14.03.2006 3,61,440/- 29,040/- Silver 06.02.2006 7,86,720/- 15.03.2006 8,37,600/- 50,880/- 1,02,745/- 4.2 The statement of Smt. Rosy Chhabra was recorded in this office and it was stated, interalia, by her as under:- “I do not know the person who is running the brokerage agency. I do not give any advance to that person. I do not know about the commission paid to the brokerage agency. I have seen the relevant copies of papers showing the purchase & sale of commodities and find that there is no entry of commission on these papers. The transaction with the brokerage agency was through some common friend of my husband at Ludhiana. No delivery was taken. The common friend of my husband was the surety with the brokerage agency. During the next financial year also, the transaction of commodity future was done and I do not know the name of the brokerage agency. It is known to the ITA No. 461 of 2010 -5- common friend of my husband.” 4.3 Sh. Sanjeev Kumar on behalf of his HUF also stated as under:- “I do not know the person who is running the brokerage agency. I do not give any advance to that person. I do not know about the commission paid to the brokerage agency. I have seen the relevant copies of papers showing the purchase & sale of commodities and find that there is no entry of commission on these papers. The transaction with the brokerage agency was through some common friend at Ludhiana. No delivery was taken. The common friend was the surety with the brokerage agency. During the next financial year also, the transaction of commodity future was done and I do not know the name of the brokerage agency. It is known to the common friend. I do not know the profit earned by me in the next year and I do not know whether the profit was advanced to Sh. Sunder Chhabra or some other person or lying in my own account.” 4.4 The state of affairs gets revealed through the statements of Smt. Rosy Chhabra and Sh. Sanjeev Kumar ITA No. 461 of 2010 -6- clearly highlights that the transactions allegedly entered into by them are not genuine. Both the persons admitted that they did not know about commission paid to the brokerage agency, that they did not know the person who was running the brokerage agency and that during the next financial year also, the transaction of commodity future was done and they do not know the name of the brokerage agency. As is well known, every person doing the brokerage business of such type involving heavy transactions would not take the risk without adequate security amount. Both the persons have also admitted their ignorance about the commission charged by the broker. It is also interesting to note that the assessee furnished affidavits from both the persons suo motto on the last day of the hearing wherein it was found to have been stated that the broker company charged brokerage which was included in the purchase price. It is thus clear that the purpose of furnishing affidavits by the assessee is an attempt to fortify his case, otherwise how it could happen that these persons could not tell about the issue of commission at the time when their statements were recorded. It can thus be concluded very rightly that the amounts allegedly received by the assessee from these two persons are his own money camouflaged as received from them through transactions which have been found to be in genuine. As such amounts of Rs.73,145/- and ITA No. 461 of 2010 -7- Rs.1,00,000/- are added to the income returned by the assessee u/s 68 of the Act as the assessee's explanation about the nature and source of these amounts has not been found satisfactory. The interest paid by the assessee in respect of these amounts worked out/ noticed at Rs.460/- & Rs.535/- are also being disallowed and added to the income returned. Total addition under this para works out at Rs.1,74,140/- (73,145/- + 1,00,000/- + 460/- + 535/-). Penalty proceedings u/s 271(c) qua this question of Rs.1,74,140/- are being initiated as I feel satisfied that the assessee has furnished inaccurate particulars of his income.” 5. The said finding was affirmed by the CIT (A) and the Tribunal. 6. Learned counsel for the appellant made strenuous efforts in order to re-appreciate the evidence to arrive at a conclusion other than the one concurrently arrived at by the authorities below. He submitted that the finding is perverse and is not based on the material on record. He placed reliance on the judgment of the Hon'ble Supreme Court in C.I.T. (Central), Calcutta v. Daulat Ram Rawatmull, [1973] 87 ITR 349 (SC) and the judgments of Rajasthan High Court and Gauhati High Court in Gem Palace v. Commissioner of Income Tax, [1987] 168 ITR 543 and Nemi Chand Kothari v. Commissioner of Income Tax and another, [2003] 264 ITR 254, respectively. 7. We have given our thoughtful consideration to the submissions made by the learned counsel for the assessee and do not ITA No. 461 of 2010 -8- find any merit in the same. 8. The Assessing Officer, the CIT (A) and the Tribunal have concurrently arrived at the conclusion that two cash credits allegedly advanced by Rosy Chhabra wife of the assessee amounting to Rs.73,145/- and Sanjit Kumar cousin of the assessee in respect of Rs.1,00,000/- and the interest paid by the assessee thereon of Rs.460/- and Rs.535/- respectively were unexplained cash credit which were added under Section 68 of the Act. Only effort on the part of the learned counsel for the assessee is to reappreciate the material and conclude otherwise. All the authorities have concurrently on appreciation of material come to the conclusion that the two cash credits were the unexplained money of the assessee introduced by him in the business. The authorities have taken a plausible view which does not call for any interference under Section 260A of the Act. 9. The judgments, referred to above, have no applicability as they were on the individual fact situation of the cases which were before the courts. 10. In view of the above, no substantial question of law arises in this appeal. 11. The appeal is accordingly dismissed. (AJAY KUMAR MITTAL) JUDGE September 28, 2010 (ADARSH KUMAR GOEL) gbs JUDGE