SHAM SUNDER vs. CIT-II JALANDHAR

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ITA/94/2009HC Punjab & HaryanaPHHC01084885200914 January 2016Author: MR. JUSTICE SURINDER GUPTA,MR. JUSTICE RAMESHWAR SINGH MALIK3 pages
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What did the High Court hold?

The High Court addressed two substantial questions of law. Regarding the first question concerning the addition of Rs. 15,91,672/-, the Court noted the assessee's concession regarding the surrender made during the survey. Crucially, the revenue, after verification, admitted that Rs. 91,672/- was part of the impounded material and was duly recorded in the assessee's regular books of account. Consequently, the Tribunal's sustained addition of Rs. 91,672/- on account of stock of unaccounted gold and diamond was deleted. The first question was answered accordingly, holding that out of the total addition of Rs. 15,91,672/-, Rs. 91,672/- stood deleted. For the second question concerning the addition of Rs. 9,00,000/- as gifts, the assessee's counsel did not present any arguments, accepting the disallowance made by the Assessing Officer, Commissioner (Appeals), and the Tribunal on the grounds that the donors were not blood relations. Therefore, the second question was answered against the assessee. The appeal was disposed of based on these findings.

What were the facts?

The assessee, Sham Sunder, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (Tribunal) dated September 12, 2008. The appeal concerned assessment years not explicitly stated but related to additions made by the Assessing Officer. The Tribunal had upheld additions of Rs. 15,91,672/- and Rs. 9,00,000/-. The appeal was admitted for hearing substantial questions of law. During the proceedings, the assessee conceded the surrender made during a survey under Section 133A concerning the Rs. 15,91,672/- addition, but challenged the Rs. 91,672/- portion related to stock. The revenue later confirmed that Rs. 91,672/- was part of the impounded material and recorded in the assessee's books.

What were the issues?

1. Whether the Tribunal erred in law and on facts by upholding the addition of Rs. 15,91,672/-, based solely on the assessee's statement recorded during a survey under Section 133A, which allegedly lacked evidentiary value? 2. Whether the Tribunal acted illegally and perversely in upholding the addition of Rs. 9,00,000/-, representing gifts received by the assessee from undisclosed sources, liable to be assessed under Section 68 of the Income Tax Act? Assessee's Contentions: - Regarding Question 1: The assessee argued that while a surrender of Rs. 15,00,000/- was made during the survey, the addition of Rs. 91,672/- on account of unaccounted stock of gold and diamond was an afterthought and unsustainable, as this amount was already entered in the regular books of account. Revenue's Contentions: - Regarding Question 1: The revenue initially sought time to verify the nature of the Rs. 91,672/- amount. Subsequently, the revenue candidly admitted that Rs. 91,672/- was part of the impounded material and reflected in the regular books of account, agreeing to set aside the addition to that extent. - Regarding Question 2: The assessee did not address arguments on the Rs. 9,00,000/- addition, accepting the findings of the lower authorities that the gifts were received from individuals who were not blood relations, thus rightly disallowed.

Which sections of the Income-tax Act were involved?

Section 260A,Section 133A,Section 68

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Decided on : 14.01.2016 Sham Sunder . . . Appellant Versus Commissioner of Income Tax-II, Jalandhar . . . Respondent CORAM: HON'BLE MR. JUSTICE AJAY KUMAR MITTAL HON'BLE MRS. JUSTICE RAJ RAHUL GARG PRESENT: Mr. Sanjay Bansal, Sr. Advocate with Mr. B.M. Monga, Advocate for the appellant. Mr.Vivek Sethi, Advocate for the respondent. **** AJAY KUMAR MITTAL, J. (Oral) The appellant-assessee has preferred the present appeal under Section 260A of the Income Tax Act, 1961 (for brevity 'the Act') against the order passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (in short 'the Tribunal') dated 12th September, 2008, passed in ITA No. 373 (ASR)/2007 (The Dy. Commissioner of Income Tax, Range-II, determination of the following substantial questions of law:- “1. Whether the Tribunal mis-directed itself in law as well as on facts in upholding the addition of Rs.15,91,672/- made by the Assessing Officer only on the basis of the statement of the appellant-assessee recorded during the survey under Section 133A of the Income Tax Act, 1961 having no evidentiary value in law?

2.

Whether on the facts and in the circumstances of the JAWALA RAM 2016.01.22 16:32 I attest to the accuracy and authenticity of this document Chandigarh - 2 - case, the Tribunal acted illegally and perversely in upholding the addition of Rs. 9 lacs made by the Assessing Officer, received by the appellant by way of gifts, representing income from undisclosed sources liable to assessed under Section 68 of the Income Tax Act?”

3.

In view of the consensus between the parties, it is not necessary to delve into the detailed facts of the case. Learned counsel for the appellant-assessee submitted that so far as question No.1 is concerned, since the assessee had made surrender of `15.00 lacs at the time of survey under Section 133A of the Act on 14th August, 2003, the said addition is not being challenged. However, the addition of ` 91,672/- sustained by the Tribunal on account of stock of unaccounted gold and diamond being an afterthought was uncalled for. According to the learned counsel, the amount of `91,672/- was entered in the regular Books of Account and in such a situation, the addition of `91,672/- was unsustainable.

4.

Mr. Vivek Sethi, Advocate appearing for the respondent- revenue had sought time on an earlier date to verify whether the amount was part of the regular Books of account or not? Learned counsel for the respondent-revenue candidly admitted that a communication dated 14.01.2016 has been received from the Department confirming that `91,672/- was part of the impounded material of the assessee and was depicted in the regular Books of Account and therefore, the addition to that extent may be set aside. Copy of the aforesaid communication produced by the learned counsel for the respondent-revenue is taken on record, subject to all just exceptions.

5.

After hearing learned counsel for the parties and in view of the JAWALA RAM 2016.01.22 16:32 I attest to the accuracy and authenticity of this document Chandigarh - 3 - above, the addition of `91,672/-, on account of stock of unaccounted gold and diamond sustained by the Tribunal is hereby deleted and the question No.1 is answered accordingly by holding that out of the addition of `15,91,672/-, addition of `91,672/- stands deleted.

6.

Learned counsel for the appellant-assessee did not address any arguments on account of gifts of `9.00 lacs as sustained by the Assessing Officer as well as by the Commissioner of Income Tax (Appeals) and the Tribunal on the ground that the said gifts were received from Sh. Bhupinder Singh and Smt. Harbhajan Kaur, who were not the blood relation and therefore had been rightly disallowed by the authorities below.

7.

In view of the above, question No.2 is answered against the assessee and the present appeal stands disposed of accordingly. (AJAY KUMAR MITTAL) JUDGE (RAJ RAHUL GARG) January 14, 2016 JUDGE J.Ram

JAWALA RAM 2016.01.22 16:32 I attest to the accuracy and authenticity of this document Chandigarh

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