THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL) vs. SHRI RAJENDRA KUMAR JAIN

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ITA/299/2018HC RajasthanRJHC02096063201827 August 2019Author: S. RAVINDRA BHAT,INDERJEET SINGH2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that there was no merit in the Revenue's argument and that no substantial question of law arose in the appeal. The Court agreed with the ITAT's conclusion that the addition of ₹5,50,000 was unwarranted due to the lack of any material or evidence in support of Madan Mohan Gupta's statement. The ITAT had reasoned that the AO made the addition solely on presumption, without any concrete evidence of a land purchase transaction by the assessee during the relevant period or surrounding years. Furthermore, the ITAT noted that the assessee was not afforded an opportunity to cross-examine Madan Mohan Gupta, rendering the addition unsustainable. The Court dismissed the appeal. The judgment also notes that another issue, in which the assessee had appealed to the Tribunal, was a subject matter of remand and the Revenue had not appealed against that decision.

What were the facts?

The Revenue (Principal Commissioner of Income Tax, Jaipur) is in appeal against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had directed the deletion of an addition of ₹5,50,000 made by the Assessing Officer (AO) and confirmed by the Commissioner of Income Tax (Appeals) [CIT(A)]. This addition arose from search and seizure proceedings conducted on May 23, 2013. The AO had brought the sum to tax based on certain notings and the statement of one Madan Mohan Gupta, who stated the amount was invested by the assessee (Shri Rajendra Kumar Jain) for property purchase. The ITAT found the addition unsustainable due to lack of material evidence and the assessee not being afforded an opportunity to cross-examine Madan Mohan Gupta.

What were the issues?

1. Whether the ITAT was justified in deleting the addition of ₹5,50,000 made by the AO, which was confirmed by the CIT(A), on the ground of lack of material evidence and denial of cross-examination opportunity to the assessee, thereby raising a question of law? The Revenue argued that the ITAT's deletion was erroneous. The assessee had denied any transaction with one Moolchand, whose name appeared in documents in the assessee's possession. The Revenue contended that the ITAT's conclusion was based on a presumption that since a group concern had purchased land previously, this payment must have been made by the assessee for land purchase. The Revenue's argument was that the ITAT's finding was based on a lack of material or evidence supporting Madan Mohan Gupta's statement. The judgment does not record specific arguments from the assessee regarding this issue, other than noting the assessee's denial of knowledge of Moolchand and the presence of Moolchand's name in documents in the assessee's possession.

Which sections of the Income-tax Act were involved?

Section 132

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 299/2018 The Principal Commissioner Of Income Tax (Central), Jaipur ----Appellant Versus Shri Rajendra Kumar Jain, D 23-25 Prem Bhawan Lal Bahadur Nagar J.l.n. Marg Jaipur ----Respondent For Appellant(s) : Mr. Siddharth Bapna, Adv. For Respondent(s) : HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE INDERJEET SINGH

Order 27/08/2019 D.B.Civil Misc. Application No.2190/2018:-

For the reasons mentioned in the application, delay in filing the appeal is condoned. The application is allowed. D.B.Income Tax Appeal No.299/2018:-

1.

In the present appeal the question sought to be urged by the Revenue is the deletion directed by the ITAT in respect of a sum of `5,50,000/- which had been brought to tax by the AO and confirmed by the CIT(A) pursuant to the search assessment.

2.

The search and seizure proceedings in the present case occurred on 23.05.2013; the assessee was one of the several people whose premises was subject to search and seizure. Based upon the documents- in the form of certain notings pertaining the details of amounts, inter alia a sum of `5,50,000/- was brought to tax. The AO based his findings upon the statement of one Madan Mohan Gupta who stated that the amounts were invested by the assessee for purchase of property of one M/s. Moonstone

(2 of 2) [ITA-299/2018] Apartment Pvt. Ltd. The CIT(A) confirmed the addition, however, on further appeal to the ITAT, the Tribunal ruled as follows:- “The assessee denied to have entered any transaction of purchase of land from Shri Mool Chand. However, the AO without bringing anything on record to disclose any transaction of purchase of land as alleged either by the assessee or by any group company of the assessee has made the addition only on the presumption that when a group concern of the assessee has purchased land in the past then this payment must have been made by the assessee for purchase of land. It is pertinent to note that when the AO has treated this as a payment made by the assessee for purchase of land then in the absence of actual transaction of purchase of land during the year under consideration or even in the subsequent years or in the immediately preceding year, the addition made by the AO is absolutely based on assumption of facts without any material disclosing any transaction of purchase of land or payment made by the assessee. Therefore, when the document itself does not reveal the transaction of payment by the assessee then the p- resumption of this fact based on the statement of Shri Madan Mohan Gupta without affording an opportunity to the assessee to cross examine Shri Madan Mohan Gupta, the said addition made by the AO is not sustainable. We have discussed this issue of validity of decision of the AO based on the statement without allowing the assessee to cross examine while deciding the issue in ground no.

2.

Accordingly the addition made by the AO is not sustainable and the same is deleted.”

3.

Learned Counsel sought to highlight that the assessee had denied the knowledge of one Moolchand, by showing that the documents in question in possession of the assessee, contend Moolchand’s name.

4.

This Court is of the opinion that there is no merit in the Revenue’s argument. The basis of ITAT’s conclusion that the addition was unwarranted was for lack of any material or evidence in support of Madan Mohan Gupta’s statement.

5.

The other question, in respect of which the assessee had appealed to the Tribunal is a subject matter of the remand. The Revenue has not appealed against that decision.

6.

For the above reasons, Court holds that no substantial question of law arises in the appeal. It is dismissed. (INDERJEET SINGH),J (S. RAVINDRA BHAT),CJ NAVAL KISHOR/8

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