THE COMMISSIONER OF INCOME TAX vs. M/S GHUNNA RAM

This petition under Section 256(2) of the Income Tax Act, 1961 (in short “the Act”) seeks mandamus to the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh (hereinafter referred to as “the Tribunal”) to refer the following question of law to this Court for its opinion:- “Whether on the facts and in the circumstances of the case, the ITAT was right in law in holding that the unexplained peak cash introduced to the tune of Rs.3,56,500/- was relatable to the amounts declared by the assessee under the Amnesty Scheme, 1985 for the assessment years: 1976-77 and 1977-78 and -2- consequently allowing the benefits of set off in the assessment year 1984-85?”

Brief facts as narrated in the petition are that the assessee introduced cash in the books of account for the assessment year 1984- 85 in the names of various creditors, bank etc. amounting to Rs.3,56,500/- on 31.3.1984 and failed to explain the sources thereof. Accordingly, the Assessing Officer made an addition of Rs.3,56,500/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short “the CIT(A)”] who deleted the said addition holding that the assessee had disclosed a sum of Rs.2,40,000/- for the assessment year 1976-77 and a sum of Rs.3,50,000/- for the assessment year 1977-78 under the Amnesty Scheme, 1985. Against the order of the CIT (A), the department filed an appeal before the Tribunal. The Tribunal upheld the order of the CIT (A) and dismissed the appeal of the department. The petition under Section 256(1) of the Act having been rejected by the Tribunal, hence the present petition.

We have heard learned counsel for the parties.

The CIT (A) had recorded that the assessee while making disclosure under the Amnesty Scheme, 1985 had disclosed a sum of Rs. 2,40,000/- for the assessment year 1976-77 and further a sum of Rs.3,50,000/- for the assessment year 1977-78. The benefit of the aforesaid disclosure had been allowed to the assessee while deleting the addition of Rs.3,56,500/- in the current assessment year. The relevant observations of the CIT (A) read thus:- “There is no denying the fact that the appellant firm -3- disclosed a sum of Rs.2,40,000/- for the asstt. year 1976-77 and a sum of Rs.3,50,000/- for the asstt. year 1977-78 under the Amnesty Scheme, 1985. The note appended with the disclosure petition read, “It is understood that the amount of Rs.3,50,000/- was available with the firm/partners as on 31.3.1977 and in subsequent years till today.” The amounts referred to supra have been assessed as per the disclosure of cash available with the appellant, by the learned ACIT for the asstt. year 1976-77 vide order dated 31.5.1988, and for the asstt. year 1977-78 vide order dated 31.7.1988. Having assessed these two amounts as cash available as on 31.3.1977 and “in subsequent years till today”, adjustment has to be made in view of the judgment of the Hon'ble Supreme Court, in the case of M/S Anantharam Veersinghaiah & Co. vs. CIT referred to supra. Accordingly, I hold that there is no justification for the impugned addition of Rs.3,56,500/-. The same is accordingly deleted. This ground succeeds and the appellant gets a relief of Rs.3,56,500/-.”

Further on appeal by the revenue, the Tribunal while dismissing the appeal had recorded as under:- “Even in the present case, there is nothing to show that the amount declared under the Amnesty Scheme had been invested by the assessee in any other -4- asset or that it had been spent in any other manner.”

The findings which had been recorded by the CIT(A) as well as by the Tribunal, as noticed above, were not shown to be perverse in any manner. The Tribunal while deciding the reference filed by the revenue under Section 256(1) of the Act noticed that the issue had been decided on appreciation of evidence and no proposition of law was involved.

In view of the aforesaid findings, no error could be said to have arisen in the order passed by the Tribunal declining to refer the question of law claimed by the revenue. Accordingly, there is no merit in this petition and the same is hereby dismissed. (AJAY KUMAR MITTAL) JUDGE November 9, 2010 (ADARSH KUMAR GOEL) gbs JUDGE