(O&M) THE COMMISSIONER OF INCOME TAX vs. KARAJ SINGH

ITA/161/2005HC Punjab & HaryanaPHHC01068899200531 March 2011Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the ITAT was right in deleting the addition. The Tribunal had found as a factual position that the amount of Rs. 1,50,000/- was received by the assessee by an account payee cheque on 28.11.1991 and was repaid within 15 days through banking channels. The Tribunal reasoned that a transaction opened and closed through a bank draft within a short span of 15 days could not be held as ingenuine without specific material to the contrary. The inability to produce Shri Naresh Kapoor before the AO was explained by newspaper cuttings indicating he was absconding, making his physical production impossible. The Tribunal respectfully followed its own precedents in the cases of ITO vs. Shri Mohan Singh and Shri Parminder Singh, where similar transactions were held to be bona fide. The ratio decidendi is that a short-term banking transaction, even if the intermediary is unavailable, can be considered genuine if supported by banking evidence and no contrary material exists. The substantial question of law was answered against the Revenue and in favour of the assessee. The issue of maintainability of the appeal under Section 268A was left open as the appeal was decided on merits.

What were the facts?

The Revenue, Commissioner of Income Tax, Bathinda, filed an appeal under Section 260A of the Income-Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT) dated 2.11.2004. The ITAT had deleted an addition of Rs. 1,50,000/- made by the Assessing Officer (AO) under Section 68 of the Act for the assessment year 1992-93. The AO had initiated proceedings under Section 147 after receiving a complaint, alleging that the assessee introduced his own funds through one Naresh Kapoor. The CIT(Appeals) had upheld the addition, but the ITAT reversed this decision. The amount was received by the assessee via account payee cheque on 28.11.1991 and repaid within 15 days.

What were the issues?

1. Whether the Income Tax Appellate Tribunal was right in deleting the addition made under Section 68 on account of unexplained cash credit to the tune of Rs. 1,50,000/-? Assessee's contentions: - The ITAT had previously decided identical issues in favour of the assessee in the cases of Mohan Singh and Parminder Singh (ITA No. 373/Chandi/2000 and ITA No. 51/Chandigarh/2000 & 43/Chandi/2000, order dated 26.5.2003), and those orders had become final. - The quantum of addition (Rs. 1,50,000/-) did not qualify for appeal filing under Section 268A of the Act, as the limit prescribed by the Board of Direct Taxes was Rs. 2,00,000/- at the relevant time. Revenue's contentions: - The ITAT erred in reversing the findings of the CIT(A) and holding that the transaction of Rs. 1,50,000/- received by the assessee by account payee cheque was genuine. - The Revenue also sought to argue that no appeal was filed in the cases of Mohan Singh and Parminder Singh, on which the ITAT relied.

Which sections of the Income-tax Act were involved?

Section 260A,Section 68,Section 147,Section 148,Section 143(3),Section 68A,Section 268A

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Income Tax Appeal No. 161 of 2005 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. --- Income Tax Appeal No. 161 of 2005 Date of decision: 31.3.2011 The Commissioner of Income Tax Bathinda --- Appellant Versus Karaj Singh --- Respondent CORAM: HON’BLE MR. JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE AJAY KUMAR MITTAL --- Present: Ms. Savita Saxsena, Standing Counsel for the appellant-Revenue. Ms. Radhika Suri, Advocate for the respondent. --- AJAY KUMAR MITTAL, J. This appeal under Section 260A of the Income-Tax Act, 1961 (for short “the Act”) has been filed by the Revenue against the order dated 2.11.2004, passed by the Income Tax Appellate Tribunal Amritsar Bench, Amritsar (in short “the Tribunal”) in ITA No. 60/ASR/2000, relating to the assessment year 1992-93. 2. The appeal was admitted for determination of the following substantial question of law by this Court: “Whether the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar was right in deleting the addition made u/s 68 on Income Tax Appeal No. 161 of 2005 2 account of unexplained cash credit to the tune of Rs. 1,50,000/-“

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