BASANT KUMAR, PROP M/S BASANT PETRO CENTRE vs. COMMISSIONER OF INCOME TAX, BATHINDA

ITA/114/2019HC Punjab & HaryanaPHHC01013406201911 September 2019Author: MR. JUSTICE AJAY TEWARI,MR. JUSTICE HARNARESH SINGH GILL3 pages
AI SummaryDismissed

What were the facts?

The appeal concerns Assessment Year(s) not explicitly stated but implied to be around 2013-2014. The assessee, Basant Kumar, is challenging an order of the Income Tax Appellate Tribunal (ITAT) which upheld the addition of Rs. 5,40,000/- to his income under Section 68 of the Income Tax Act, 1961. The addition was based on a loan allegedly advanced by the assessee's employee, Chiman Lal. The authorities found that Chiman Lal, with a monthly income of Rs. 14,000-15,000, deposited Rs. 3,00,000/- in cash into his bank account on 16.5.2013, which was immediately transmitted to the assessee. Further sums of Rs. 40,000/- and Rs. 2,00,000/- were deposited and transferred similarly on 7.8.2013 and 14.8.2013, respectively. Chiman Lal reportedly had no prior bank account and his creditworthiness was questioned.

What did the High Court hold?

The High Court dismissed the appeal, upholding the Tribunal's decision. The Tribunal found it highly unusual that Chiman Lal would keep his entire savings in cash. Furthermore, the court found it strange that if Chiman Lal decided to start using his bank account on 16.5.2013, he did not deposit his entire savings, retaining Rs. 2,40,000/- in cash. The court noted that Chiman Lal was admittedly not an income tax assessee, suggesting he was not a wealthy individual but barely able to make ends meet. The court distinguished the case relied upon by the assessee, Commissioner of Income Tax versus Deen Dayal Choudhary (2017), as the lenders in that case were income tax assessees who could prove the infusion of funds in their banks. The ratio decidendi is that the circumstances surrounding the alleged lender's financial capacity and the nature of the transactions must be scrutinized to determine if the onus under Section 68 has been discharged, and in this case, the circumstances did not satisfy the court.

What were the issues?

1. Whether, in the facts and circumstances of the case, the invocation of the deeming provision for making additions under Section 68 of the Income Tax Act, 1961, is unreasonable when the identity, creditworthiness, genuineness, bonafide, and capacity to pay are proved and the onus is discharged, thereby suffering from non-application of mind? Assessee's Contention: The assessee argued that the authorities below erred in deciding against him because Chiman Lal had appeared, given his affidavit, and the money was transacted through banking channels, both for the advance and its return. The assessee contended that the onus under Section 68 was discharged. Revenue's Contention: The judgment does not explicitly record the revenue's arguments. However, the reasoning of the Tribunal and the High Court implies that the revenue contended that Chiman Lal's creditworthiness was not proved, and the nature of the transactions raised doubts about the genuineness of the loan.

Which sections of the Income-tax Act were involved?

Section 68,Section 260-A

AI-generated summary — verify with the full judgment below

ITA No. 114 of 2019 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 114 of 2019 (O&M) Date of Decision: 11.9.2019 CORAM: HON’BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE HARNARESH SINGH GILL Present: - Mr. Divya Suri, Advocate and Mr. Sachin Bhardwaj, Advocate for the appellant. ***** AJAY TEWARI

, J. (ORAL)

CM-5282-CII-2019 This is an application for condonation of delay of 45 days in re-filing the present appeal.

For the reasons stated in the application, the same is allowed. Delay of 45 days in re-filing the appeal is condoned ITA-114-2019 (O&M)

1.

This appeal has been filed under Section 260-A of the Income Tax Act, 1961 ('Act' for short) against the order of Income Tax Appellate Tribunal ('Tribunal' for short) upholding the action of the authorities in invoking Section 68 of the Income Tax Act, 1961 and thereby adding an amount of Rs. 5,40,000/- to the income of the assessee.

2.

The case of the assessee was that his employee Chiman Lal had advanced a sum of Rs. 5,40,000/- by way of cheque (which was duly returned with interest w

The order continues below.

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