SWARN SINGH vs. COMMISSIONER OF INCOME TAX PATIALA

ITA/342/2016HC Punjab & HaryanaPHHC01110549201610 November 2016Author: MR. JUSTICE M.M. AGGARWAL,MR. JUSTICE AVNEESH JHINGAN9 pages
AI SummaryDismissed

What were the facts?

The assessee filed an appeal before the High Court against an order of the Income Tax Appellate Tribunal (Tribunal) for Assessment Year 2009-10. The Assessing Officer (AO) made additions of ₹28.50 lakhs on account of unexplained cash deposits in the assessee's bank accounts. The assessee claimed these deposits arose from the sale of a plot and a shop. For the plot sale, the assessee claimed receipt of ₹23 lakhs in cash from S/Shri Sanjay Kumar, Harbilas, and Subhash Kumar. For the shop sale, the assessee claimed receipt of ₹5 lakhs in cash from Shri Bhoop Narayan. The AO rejected the explanation as the alleged payees were either untraceable, their statements were unsatisfactory, or agreements were not on judicial paper. Additions of ₹50,000/- for an unexplained cash deposit and ₹22,317/- for undisclosed interest were also made. The Commissioner of Income Tax (Appeals) and the Tribunal confirmed these additions, finding the assessee's explanations improbable and lacking evidence.

What did the High Court hold?

The High Court held that the appeal did not raise any substantial question of law. The issues involved were purely questions of fact that had been decided concurrently by the Assessing Officer, the Commissioner of Income Tax (Appeals), and the Income Tax Appellate Tribunal. The Court found that the order appealed against took a probable view and was not perverse, thus warranting no interference. The Tribunal had found that the assessee failed to satisfactorily explain the cash deposits. At least two of the four alleged payees were untraceable. The statements of the other two were disbelieved. The alleged agreement to sell for the plot was rejected, and the genuineness of the transactions leading to the receipt of ₹23 lakhs was not proven. The Tribunal also noted that the entire advance money was not refunded immediately upon cancellation of the agreement, and it was unbelievable that the payees disappeared without seeking refunds. The addition of ₹50,000/- was upheld due to the lack of evidence. The Court found no reason to interfere with the concurrent findings of fact.

What were the issues?

1. Whether, under the facts and circumstances, the Tribunal's order is unreasonable for overlooking and not returning findings on the existence of the payee to capital account transactions, as per Section 32 of the Indian Evidence Act, 1872, and Section 2(14) of the Income Tax Act, 1961? 2. Whether, under the facts and circumstances, pursuant to Sections 2(14), 45(1) read with Section 51 of the Income Tax Act, 1961, advance money arising from an agreement to sell should be deducted from the 'cost of asset' or if the whole amount is chargeable to tax as a revenue receipt under Section 5? Assessee's contentions: The assessee argued that the Tribunal's order was unreasonable for failing to consider direct evidence regarding the existence of payees and for not properly addressing the nature of advance money received from an agreement to sell. Revenue's contentions: The revenue contended that the assessee failed to prove the identity, creditworthiness, and genuineness of the transactions with the alleged payees. The agreements were not on judicial paper, and the payees were either untraceable or their explanations were unsatisfactory. The Tribunal's findings were based on facts and were not perverse.

Which sections of the Income-tax Act were involved?

Section 260-A,Section 32,Section 2(14),Section 45(1),Section 51,Section 5,Section 131

AI-generated summary — verify with the full judgment below

I. T. A. No. 342 of 2016 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Case No. : I. T. A. No. 342 of 2016 (O&M)

Decided On : November 10, 2016 CORAM : HON'BLE MR. JUSTICE S. J. VAZIFDAR, CHIEF JUSTICE. HON'BLE MR. JUSTICE DEEPAK SIBAL. * * * Present : Mr. Sachin Bhardwaj, Advocate for the appellant. * * * DEEPAK SIBAL, J. : Invoking Section 260-A of the Income Tax Act, 1961 (for short – the Act), the assessee has filed the present appeal, which pertains to the Assessment Year 2009-10 and seeks to raise therein the following substantial questions of law :- “I.

Whether under the fact & circumstances of the case, the Tribunal order is unreasonable while overlooking & neither returning any findings on the `fact and direct evidence` u/s 32 of Indian Evidence Act, 1872 qua the existence of the payee to the capital account transactions u/s 2(14) of the Income Tax Act, 1961 ? II.

Whether under the fact & circumstances of the case, pursuant to the Provisions of Monika 2016.11.18 16:50 I attest to the accuracy and authenticity of

The order continues below.

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