ITA No.245 of 2008 ::1:: IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision : September 22, 2008 1. ITA No.245 of 2008 M/S Jay Kay International vs C.I.T Aayakar Bhawan, Ludhiana 2. ITA No.299 of 2008 M/S Jay Kay Hosiery Exports vs C.I.T Aayakar Bhawan, Ludhiana 3. ITA No. 367 of 2008 M/S Jay Kay Expo Knit Fab vs C.I.T Aayakar Bhawan, Ludhiana CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY TEWARI *** Present : Mr.S.K.Mukhi, Advocate for the assessee. Mr.Rajesh Sethi, Sr.Standing Counsel for the revenue. *** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? *** AJAY TEWARI, J This order shall dispose of I.T.A Nos.245, 299 and 367 of 2008 as common questions of law and facts are involved therein. For the sake of convenience, facts are being extracted from ITA No.245 of 2008. During a survey conducted under Section 133A of the Income Tax Act, 1961 (for short “the Act”), the appellant surrendered an amount of Rs.25 lacs. The assessee filed return on 31.10.2003 for the assessment year 2003-04 declaring income at Rs.18,38,130/-. The case of the appellant was ITA No.245 of 2008 ::2:: processed under Section 143(1) of the Act. Ultimately, the Assessing Officer disallowed the deduction under Section 801B of the Act by order dated 13.10.2005. In appeal, the Commissioner of Income Tax(A) reversed the order of the Assessing Officer by order dated 5.1.2006. The revenue went in appeal before the Tribunal which, vide the impugned order dated 29.6.2007, allowed the appeal and upheld the order of the Assessing Officer. This appeal proposes the following substantial questions of law:- “ I. Whether, on the facts and circumstances of the case, the ITAT was justified in law in holding that appellant was not entitled to the deduction u/s 80IB on the surrendered amount though utilized for the business of the appellant without placing any evidence against the assessee on record and without rebutting the evidence presented by the assessee on record ? II. Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified in denying the claims of the appellant u/s 80IB of the Income Tax Act, 1961 by blindly relying upon the judgment of this Court in the case of National Legguard Works vs CIT and another, 288 ITR 18 (P&H) which is distinguishable on facts itself ? III. Whether on the facts and circumstances of the case, the findings of ITAT are perverse and against the evidence on record thus unsustainable in law ? ITA No.245 of 2008 ::3:: IV Whether the ITAT has misdirected itself in being influenced by irrelevant factors and applying erroneous criteria while deciding the issue for claiming deduction under section 80IB of the Income Tax Act, 1961 ?” The Tribunal found as a fact that the surrendered income, which was subsequently introduced in the books of accounts as sundry business income, was neither established nor co-related with the business of the assessee, which is manufacturer of hosiery. The Tribunal further found that apart from this amount, the assessee has not earned any positive income from the manufacturing activities. In National Legguard Works v. Commissioner of Income-tax (Appeals) and another, (2007) 288 ITR 18 (P&H), this Court held as follows :- “ We are unable to accept this submission. Deduction under section 80 HHC of the Act is available only on showing fulfilment of the conditions specified therein and there could be no presumption that surrender made on account of unexplained stocks represented export income. The assessee was unable to give any explanation. There could be no presumption that the additional amount surrendered represented income from exports. Deduction under section 80 HHC of the Act can be claimed only on showing facts which make the assessee eligible for the deduction. The burden to prove these facts was on the assessee and not on the Revenue.” The enunciation of law applies with full force to the facts of ITA No.245 of 2008 ::4:: this case. In this view of the matter, no substantial question of law arises. These appeals are consequently dismissed with no order as to costs. ( AJAY TEWARI ) JUDGE ( ADARSH KUMAR GOEL ) JUDGE September 22, 2008 'kk'