GURJEET SINGH S/O SHRI TARA SINGH vs. COMMISSIONER OF INCOME TAX PATIALA

This appeal has been preferred by the assessee under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 25.1.2012 passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh (hereinafter referred to as “the Tribunal) in ITA No. 1335/CHD/2010, for the assessment year 2007-08, claiming the following substantial questions of law:- A. Whether under the facts and circumstances and evidences filed on record, the ITAT was justified in reversing the order of CIT(A) and thereby confirming addition made by the assessing authority by erroneously holding that the appellant failed to adduce corroborative documentary evidence in the -2- form of receipts and bills to the factum of incurring the impugned expenditure for getting the compromise made for the disputed property that too before the Court of Civil Judge (Senior Division), Patiala? B. Whether the order passed by the ITAT confirming the order of authorities below is perverse, against the provisions of law and deserve to be set aside?

Briefly stated, the facts necessary for adjudication of the present appeal as narrated therein are that the assessee being an individual is engaged in the business based at Patiala. He filed his return of income for the assessment year 2007-08 on 29.10.2007 declaring income at ` 1,62,650/-. The said case was taken up for scrutiny. The Assessing Officer found that the assessee had credited an amount of ` 4,29,460/- on account of the sale of shop. The assessee vide his letter dated 6.10.2009 explained to the Assessing Officer that the shop was purchased on 27.9.2005 for a sum of ` 5,50,000/-. Further, it was explained that a sum of ` 3,50,000/- was spent on settlement as the shop in question was disputed. In this way, the total cost of the shop came to be ` 9,00,000/-. The said shop was sold for an amount of ` 9,25,000/- and the payment was received through two cheques. The Assessing Officer vide order dated 26.11.2009 (Annexure A-1) made an addition on account of short term capital gain of ` 3,75,000/- holding that the property was purchased for ` 5,50,000/- and sold for ` 9,25,000/-. Against the said addition made by the Assessing Officer, the assessee approached the Commissioner -3- of Income Tax (Appeals) [in short the “CIT(A)”] by way of an appeal. The CIT(A) vide order dated 29.9.2010(Annexure A-2) allowed the appeal and deleted the said addition. Feeling aggrieved, the revenue filed an appeal against the order dated 29.9.2010 (Annexure A-2) before the Tribunal who vide order dated 25.1.2012 (Annexure A-3) reversed the order of the CIT(A). Hence, the present appeal by the assessee.

We have heard learned counsel for the appellant.

The issue in the present appeal is whether the assessee was entitled to claim deduction of ` 3,50,000/- on account of expenses from the sale consideration of ` 9,25,000/- received by him from the sale of the shop.

The Tribunal while disallowing the claim of the appellant had recorded as under:- “We have carefully perused the facts of the case, rival submissions and the relevant record made available. The AO made the impugned addition on the ground that the assessee has failed to prove the nature and source of Rs.3.50 lacs, allegedly incurred on the settlement of dispute. The ld. CIT(A) also concentrated on the issue of nature and source of said amount. However, the assessee has failed to adduce any evidence in the form of receipt or any other credible evidence to the effect of establishing that the amount of Rs.3.50 lacs has been incurred for the purpose of arriving at the settlement in respect of the said property. The onus squarely lies on the -4- assessee for the claim of expenditure made by the assessee. It is interesting to note that the ld. AR admitted that the impugned expenditure has not been disclosed in the books of account, which were produced at the appellate stage by the assessee. A reference has been made by the CIT(A) to the ratio of Mehta Parikh & Co. (supra). In this context, it is mentioned that the Hon'ble Madhya Pradesh High Court in the case of Smt. Gunwanti Bai v. CIT (1983) 12 Taxman 86 (MP) and the Hon'ble Allahabad High Court in the case of Ram Rattan v. CIT (1983) 13 Tax 309 (All) had the occasion to appreciate the ratio laid down by the Hon'ble Supreme Court in the case Mehta Parikh Co. (supra). The observations of the Hon'ble High Courts are applicable to the facts of the present case. The Hon'ble Madhya Pradesh High Court held that “an affidavit is a piece of evidence, which along with other material on record, has to be taken into consideration by the Tribunal, before arriving at a finding. However, a statement by a deponent can be held to be un-reliable by the Tribunal either on the basis of cross examination of the deponent or by reference to other material on record, leading to the inference that the statement made in the affidavit cannot be held to be true.”

The onus was upon the assessee to substantiate that -5- ` 3,50,000/- had been spent by him as he had claimed deduction on that account but had failed to produce any material to establish the same. The Tribunal has recorded that the assessee had not adduced any evidence to show that any amount was paid for the settlement of dispute in respect of the property sold by him. The nature and source of ` 3,50,000/- had also not been proved. In fact, the expenditure had not been disclosed in the books of account which were produced at the appellate stage by the assessee. An effort was made by the learned counsel for the appellant to re-appreciate the material without pointing out any misreading of evidence or non-consideration thereof to dislodge the findings recorded by the Tribunal. The findings of the Tribunal could not be shown to be either erroneous or perverse in any manner.

In view of the above, no question of law arises in this appeal. The appeal being meritless, is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE July 23, 2012 (G.S. SANDHAWALIA) gbs JUDGE