CIT vs. SUKHJIT SINGH

This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short “the Act”) against the order dated 23.7.2009 passed by the Income Tax Appellate Tribunal, Chandigarh Bench “B”, Chandigarh in ITA No. 515/Chd/2009, relating to the assessment year 2005-06, claiming the following substantial question of law:- “Whether, on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in deleting the addition of Rs.17,19,000/- made u/s 68 of the I.T. Act, when the assessee had failed to -2- establish the genuineness and source of the same during the course of the assessment proceedings?”

Briefly stated, the facts necessary for adjudication as narrated in the appeal are that the assessee filed his return of income on 5.8.2005 for the assessment year 2005-06 declaring an income of Rs.1,03,500/- plus agricultural income amounting to Rs.3,75,000/-. The case of the assessee was taken up for scrutiny and the assessment order was passed on 31.12.2007 at an income of Rs.18,93,500/- plus Rs.3,75,000/- as agricultural income against returned income of Rs.1,03,500/- plus agricultural income Rs.3,75,000/-. The Assessing Officer made an addition of Rs.17,19,000/- on account of cash deposit. The assessee approached the Commissioner of Income Tax (Appeals) [in short “the CIT(A)”] by way of an appeal and the CIT(A) vide order dated 13.3.2009 sustained the aforesaid addition of Rs.17,19,000/-. On further appeal by the assessee, the Tribunal vide order dated 23.7.2009 allowed the appeal and deleted the addition of Rs.17,19,000/- by holding that the said amount could be grown from the sale proceeds of 100 acres of land. Hence, the present appeal by the revenue.

We have heard learned counsel for the parties.

The point for consideration in this case is whether the assessee had derived agricultural income amounting to Rs.17,19,000/-.

Learned counsel for the revenue submitted that the Assessing Officer as well as the CIT(A) came to the conclusion that the assessee had failed to establish and discharge the onus which was placed on him to show that the deposit made in the account was on account of agricultural income. He has placed reliance upon the -3- following findings recorded by CIT(A):- “3.4 I have given my careful consideration to the assessment order, rival contentions and counter comments thereon of the A.O. After considering the same, I am of the view that it is well settled principle of law that the onus to establish the genuineness and source of cash deposit in this case is upon the assessee. Mere filing of affidavit or copy of ledger account is not enough to discharge the onus. This principle of law is established in the decisions of Punjab and Haryana High Court in 273 ITR 206 and 254 ITR 617 and even in the decision of Hon'ble Juri ictional Tribunal in the case of M/s Ashok Trading Co. Vs. ITO, Kaithal, ITA No.452/Chandi/2003.

5 Moreover, the Assessing Officer is entitled to enquire and satisfy himself about the sources of money in the hands of the assessee. In this case, the source of money deposited in the bank account was not explained. The mere statement that he is only an agriculturist and has no business and CA told him that return of income showing agricultural income alone could not be filed as it is not taxable is hard to believe. The case laws cited by the counsel are quite different to the facts of this case and are not applicable. Therefore, keeping in view the above facts and discussion, I hold that the Assessing Officer is justified in making the addition of Rs.17,19,000/-. The additional evidence furnished by the assessee before me is also of no -4- consequence in so far as the source of cash deposit of Rs.17,19,000/- has not been satisfactorily explained.”

On the other hand, learned counsel for the assessee supported the order passed by the Tribunal and has placed reliance on the following judgments:- (i) Commissioner of Income Tax v. Ashok Arora, [2010] 329 ITR 578 (P&H); and (ii) Commissioner of Income-Tax v. D.S. Promoters and Developers Pvt. Ltd., [2011] 330 ITR 291 (Delhi);

We have given our thoughtful consideration to the respective submissions of learned counsel for the parties.

From a perusal of the order of the Tribunal, we find that the Tribunal had proceeded to record the finding deleting the addition of Rs.17,19,000/- on the basis of conjectures that the assessee must have grown on the land and the amount so deposited was from the sale proceeds of produce grown on 100 acres of land without there being any material to substantiate the said claim. The relevant finding recorded by the Tribunal reads thus:- “We are of the view that even the income if estimated at the rate of Rs.25,000/- per acre, still it goes to Rs.25 lakhs. If the totality of facts and circumstances are analysed, it can be said that the impugned amount of Rs.17,19,000/- can be grown from 100 acres of land.”

The finding recorded by the Tribunal being based on consideration of non-existent material is vitiated and liable to be set -5- aside. The judgments relied upon by learned counsel for the assessee has no applicability to the facts of the present case.

Accordingly, the substantial question of law is answered in favour of the revenue. The appeal is allowed and the impugned order passed by the Tribunal is set-aside. The matter is remitted to the Tribunal to proceed afresh in accordance with law.

The parties through their counsel are directed to appear before the Tribunal on 23.5.2011 for further proceedings in the matter. (AJAY KUMAR MITTAL) JUDGE February 16, 2011 (ADARSH KUMAR GOEL) gbs JUDGE -6- (i) Commissioner of Income-Tax, Mysore v. Segu Buchiah Setty, [1970] 77 ITR 539 (SC); (ii) Commissioner of Income-Tax v. Vir Bhan and sons, [2005] 273 ITR 206 (P&H); (iii) Miri Mal Mahajan v. Commissioner of Income-Tax and another, [1974] 95 ITR 186 (P&H); (iv) Commissioner of Income-Tax v. Rayala Corporation (P) Ltd., [1995] 215 ITR 883 (Mad); (v) Commissioner of Wealth-Tax, Delhi-I v. Gurdial Singh, [1980] 123 ITR 483 (Del); (vi) Commissioner of Income-Tax, A.P.-III v. Moduri Rajaiah Gari Kishtaiah, [1980] 123 ITR 494 (AP);

3 In regard to documents filed by the counsel of the appellant, the A.O. Has stated that the photocopies of the ledger a/c do not bear the signatures ad stamp of the Commission Agent and only certified by the assessee himself. However, as per copy of account of Sh. Sukhjeet Singh, the sale proceed of agriculture produce during the year relevant to the A.Y. 2005-06 has been shown at Rs.9,09,926/-. The amounts received on different dates are through cheque on 21.4.2004 only and all other are in cash. He further stated that the deposits and withdrawals do not tally from the ledger account and mere filing the affidavit do not fulfill the condition of discharging the onus lies upon him.