M/S RAM GOPAL HARBANS LAL ETC vs. COMMISSIONER OF INCOME TAX, HISSAR

ITA/132/2011HC Punjab & HaryanaPHHC01095446201111 March 2011Author: MR. JUSTICE AJAY KUMAR MITTAL,MR. JUSTICE ADARSH KUMAR GOEL4 pages
AI SummaryDismissed

What were the facts?

The assessee, M/s Ram Gopal Harbans Lal, a firm running a petrol pump, appealed a High Court order concerning assessment year(s) not specified. The appeal challenged the Income Tax Appellate Tribunal's (ITAT) order dated 28.6.2010, which upheld an addition of Rs. 2,00,000/-. This sum was credited in the assessee's accounts as a loan from Dinesh Goyal. The Assessing Officer (AO) questioned the genuineness of this credit. Dinesh Goyal, when examined, claimed the amount was a gift from a relative, but this explanation was found to be improper as he had no independent sources of income. Consequently, the AO treated the Rs. 2,00,000/- as the assessee firm's unexplained income. This finding was affirmed by the Commissioner of Income Tax (Appeals) and the ITAT.

What did the High Court hold?

The High Court dismissed the appeal. It found that the concurrent findings of fact by the three authorities (AO, CIT(A), and ITAT) were that the assessee firm had no proper explanation for the credit entry and that it represented its undisclosed income. The explanation provided by Dinesh Goyal was considered false because he lacked independent sources of money, and his claim of receiving a gift was also deemed false. The Court found these conclusions to be based on the appreciation of material on record and not unreasonable or perverse. Therefore, the questions raised were not considered substantial questions of law. The Tribunal had relied on the principle that for proving a credit under Section 68, the identity, creditworthiness of the lender, and genuineness of the transaction must be established. The Tribunal noted that Dinesh Goyal's bank account showed a meager balance, and he received the Rs. 2,00,000/- by demand draft, which he then gave as a loan to the assessee. His statement that he obtained the gift due to 'need' and the lack of confirmation from the alleged donor indicated that his creditworthiness was not established. The Tribunal concluded that it was the assessee's own money in the guise of a loan. The Court also cited CIT v. P. Mohanakala (291 ITR 278) to emphasize that an explanation under Section 68 must be proper and acceptable, which was not the case here, thus the assessee failed to discharge its burden.

What were the issues?

1. Whether, on the facts and circumstances, the ITAT was legally correct in holding that a sum of Rs. 2,00,000/- received by Dinesh Goyal from his relatives by bank draft, deposited in his account, and then deposited with the appellant firm, was not genuine and belonged to the firm as an unexplained cash credit, liable to be assessed under Section 68 of the Income Tax Act, 1961 (the Act)? 2. Whether, in light of established law and the facts, the ITAT was legally justified in concluding that the assessee had not discharged the burden of proof under Section 68 of the Act and that the ingredients for invoking Section 68 were present? 3. Whether, even after admission of the loan amount by the appellant firm from Dinesh Goyal, there was any material on record to hold that the gift amount, even if not accepted as genuine in Dinesh Goyal's account, could legally be attributed as the income of the appellant firm? 4. Whether, on the facts and circumstances and settled propositions of law, the appellant had not proved the identity of the loaner, genuineness of the transaction, and capacity of the person advancing the loan, warranting the application of Section 68 of the Act against the appellant? Assessee's contentions: The addition made by the AO and upheld by the CIT(A) and ITAT was not warranted. The creditor, Dinesh Goyal, had received a gift from his maternal uncle. In any case, the addition should have been made in the hands of the creditor. Revenue's contentions: Not recorded.

Which sections of the Income-tax Act were involved?

Section 68,Section 260-A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 11.3.2011 M/s Ram Gopal Harbans Lal. -----Appellant. Vs. Commissioner of Income Tax. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. R.S. Sihota, Sr.Advocate with Mr. B.R. Rana, Advocate for the appellant. --- ADARSH KUMAR GOEL, J.

1.

This appeal has been preferred by the assessee under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, New Delhi dated 28.6.2010 in ITA No.726/Del/2009 claiming following substantial questions of law:- (I) Whether on the facts and circumstances the Income Tax Appellate Tribunal was correct in law to hold that a sum of Rs.2,00,000/- received by Dinesh Goyal from his relatives by bank draft and deposited in his bank account and thereafter deposited in his bank account and thereafter deposited with the Appellant firm was not genuine and belongs to the firm as unexplained cash credit and liable to be assessed under section 68 of the Income Tax Act, 1961 as income of the Appellant Firm? (II). Whether

The order continues below.

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