(O&M) BALBIR CHAND VIRMANI, vs. COMMISSIONER OF INCOME TAX ETC.

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ITA/144/1999HC Punjab & HaryanaPHHC01038251199906 November 2019Author: MR. JUSTICE AJAY TEWARI,MRS. JUSTICE ALKA SARIN3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the reasoning of the Tribunal was correct, and that of the Commissioner was perverse. The Tribunal correctly reasoned that once the assessee accepted documents seized from his premises, owned the entries, and undertook to explain them in the next financial year but failed to do so, the amount represented by those entries was rightly added to his income. The High Court found no sufficient cause to reverse the Tribunal's finding of fact regarding the Gross Profit (GP) rate on the difference in stock. Consequently, the appeal was dismissed.

What were the facts?

During a search and seizure operation on 12.5.1989 at the business and residential premises of the assessee, Sh. Balbir Chand Virmani, certain books and documents were found. During the assessment for the year 1989-90, the assessee stated that entries found in seized books would be explained in the subsequent financial year 1990-91. However, no explanation was provided. The Assessing Officer added Rs. 1,34,870/- as income from outside sources. The Commissioner deleted these additions, holding that the assessee was not bound to disclose the meaning of documents not in his handwriting. The Revenue appealed to the ITAT. The ITAT held that figures in a diary seized from the assessee's house needed explanation, especially since the assessee had initially owned the entries and promised to explain them later.

What were the issues?

1. Whether the Tribunal was correct in holding that the assessee was obligated to explain figures found in a diary seized from his premises, even if the handwriting was not his, given his initial acknowledgment and promise to explain them later (Section 68 of the Income Tax Act, 1961)? Assessee's Contention: The judgment does not record specific arguments made by the assessee before the High Court regarding this issue. However, the Commissioner's reasoning, which was overturned by the ITAT and the High Court, suggests the assessee's position was that he was not bound to explain documents not in his handwriting. Revenue's Contention: The Revenue argued before the ITAT that the assessee could not escape the duty to explain figures in a seized diary, especially after initially owning the entries and promising to explain them in a subsequent year, which he failed to do. The High Court agreed with the ITAT's reasoning.

Which sections of the Income-tax Act were involved?

Section 260A,Section 68

AI-generated summary — verify with the full judgment below

ITA-144-1999 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-144-1999 (O&M) Date of Decision : 6.11.2019 Sh. Balbir Chand Virmani

...... Appellant Versus Commissioner of Income Tax and another ...... Respondents CORAM : HON'BLE MR.JUSTICE AJAY TEWARI : HON'BLE MS. JUSTICE ALKA SARIN *** Present : Mr. Alok Mittal, Advocate for the appellant. Mr. Varun Issar, Junior Standing counsel for the respondents. *** AJAY TEWARI, J. (Oral)

1.

This appeal has been filed under Section 260A of the Income Tax Act, 1961 against the order dated 28.6.1999 of the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (ITAT) allowing an appeal filed by the Revenue wherein it had challenged the deletion of certain additions done by the Commissioner.

2.

Brief facts of the case are that some additions had been made by the Assessing Officer during a search and seizure operation at the business and residential premises of the assessee on 12.5.1989, during that procedure certain books and documents were found. During the course of assessment procedure in the year 1989-90 the assessee had stated that certain entries (which were found in the books of account ANURADHA 2019.11.08 10:15 I attest to the accuracy and integrity of this document

ITA-144-1999 (O&M) 2 which was seized during the search and seizure) would be explained in the next financial year that is 1990-91. However, subsequently no explanation was furnished and thus he made an addition of Rs.1,34,870/- treating as assessee's income from outside sources in the books of account.

3.

In appeal the Commissioner held that since the documents which were recovered did not bear the handwriting of the assessee and any person associated with him, he was not bound to disclose what they were representing and consequently, deleted those additions.

4.

In the appeal filed by the Revenue, the Tribunal held that figures which were written in a diary which was seized from the house of the assessee would have to be explained to some extent at least, and the assessee could not get away merely by asserting that even though those diaries were recovered from him yet since the handwriting was not proved to be his, he had no duty at all to explain about all those figures. The Tribunal also noticed that the assessee had initially owned these entries and had stated that they were of subsequent years i.e. 1990-91 and he would explain them in that year's return but he did not explain them.

5.

In our considered opinion, the reasoning adopted by the Tribunal is correct while that adopted by the Commissioner was perverse. Once the assessee accepted the documents which were seized from his premises, and once he had owned the entries and undertaken to explain them in the next financial year and had not offered any explanation whatsoever the amount representing were rightly added to other income of the assess.

6.

There is another dispute regarding application of Gross ANURADHA 2019.11.08 10:15 I attest to the accuracy and integrity of this document

ITA-144-1999 (O&M) 3 Profit (GP) rate on the difference of the stock which was physical present in stock register. In regard to this issue, the finding of the Tribunal is a pure finding of fact and no sufficient cause has been shown to us to reverse the same.

7.

Consequently, the appeal stands dismissed.

8.

Since the main case has been dismissed, the pending application, if any, also stands disposed of.

(AJAY TEWARI)

JUDGE (ALKA SARIN) JUDGE 6.11.2019 anuradha

Whether speaking/reasoned - Yes/No Whether reportable - Yes/No ANURADHA 2019.11.08 10:15 I attest to the accuracy and integrity of this document

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