C I T vs. UMA GUPTA

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ITA/168/2008HC Punjab & HaryanaPHHC01080133200829 August 2008Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE AJAY TEWARI3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises. It found that the CIT and the Tribunal had recorded a finding of fact that the FDR in question belonged to the father-in-law of the assessee and not to the assessee. Therefore, the questions of law sought to be raised by the revenue did not arise from the facts as determined by the lower authorities. The judgment relied upon by the revenue, ITO v. Ch. Atchaiah, was distinguished. In that case, the issue was whether the Department had the option not to assess an Association of Persons (AOP) when individuals had already been assessed, and it was held that the AOP was liable to be assessed under Section 183 irrespective of individual assessments. The present case was not concerned with such a situation. The appeal was dismissed.

What were the facts?

The Revenue (Commissioner of Income Tax, Chandigarh-II) appeals against an order of the Income Tax Appellate Tribunal (ITAT). The ITAT had upheld a decision of the Appellate Authority, which had reversed the Assessing Officer's (AO) addition of income to the assessee, Ms. Uma Gupta's, hands. The AO had issued a notice under Section 148 of the Income Tax Act, 1961, to the assessee and her family members based on information that they owned cash-funded Fixed Deposits (FDs). The assessee's father-in-law had claimed these FDs, made in the assessee's name, as being from his resources. The AO found the assessee's reply unsatisfactory and added the income from these FDs to her assessment. The Appellate Authority reversed this, and the ITAT upheld that reversal.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the order of the ITAT is perverse as it failed to appreciate that the AO made the addition based on evidence and that the declaration of such income by the father-in-law of the assessee in his own hands would not preclude the AO from making the assessment in the hands of the 'right person' (the assessee), given sufficient evidentiary material. 2. Whether on the facts and circumstances of the case and in law, the ITAT was correct in holding that the AO accepted the fixed deposits as belonging to Shri Tarsem Gupta solely because the AO accepted the income from the concerned FDRs shown by Shri Tarsem Gupta in his return, failing to appreciate that the AO could not have reduced Shri Tarsem Gupta's income. Assessee's Contentions: Not recorded. Revenue's Contentions: Relied on the Supreme Court judgment in ITO v. Ch. Atchaiah (218 ITR 239). Argued that the ITAT's order was perverse and that the AO's addition was based on evidence, and the father-in-law's declaration did not prevent assessment in the assessee's hands. Also argued that the ITAT erred in concluding the AO accepted the FDRs as belonging to the father-in-law merely because the income was offered by him.

Which sections of the Income-tax Act were involved?

Section 148

AI-generated summary — verify with the full judgment below

In the High Court of Punjab and Haryana at Chandigarh Date of Decision: 29.08.2008 Commissioner of Income Tax, Chandigarh-II ...... Appellant Versus Ms.Uma Gupta ...... Respondent Coram: Hon'ble Mr. Justice Adarsh Kumar Goel Hon'ble Mr. Justice Ajay Tewari 1.Whether Reporters of local papers may be allowed to see the judgment? 2.To be referred to the Reporters or not? 3.Whether the judgment should be reported in the Digest? Present: Ms. Urvashi Dhugga, Advocate for the appellant. **** Ajay Tewari, J. This is an appeal by the revenue against the order of Income tax Appellate Tribunal, Chandigarh Bench-B (hereinafter referred to as 'the Tribunal') in ITA No. 765/CHANDI/2006 dated 31.07.2007, proposing the following substantial questions of law:- 1. “Whether on the facts and the circumstances of the case and in law, the order of the ITAT is perverse as it has failed to appreciate that the Assessing Officer has made the addition on the basis of evidence collected and declaration of such income by the father-in-law of the assessee in his own hands would not preclude the Assessing Officer from making the assessment in the hands of the 'right person' i.e. the assessee, regarding which sufficient evidentiary material is available?

2.

Whether on the facts and circumstances of the case and in law, the ITAT was correct in holding that the Assessing Officer has accepted the fixed deposits as belonging to Shri Tarsem Gupta simply on the premise that the Assessing Officer had accepted the income from the concerned FDRs shown by Sh.Tarsem Gupta in his return. The ITAT failed to appreciate the fact that the Assessing Officer could not have reduced the income of Sh. Tarsem Gupta.” On the basis of an information received, notice under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was issued to the assessee and her family members on the ground that the family owns many FDRs made in cash which had been claimed by the father-in- law of the assessee as having been made from his resources, albeit in the name of the assessee. Having not found the reply satisfactory, notice under Section 148 of the Act was issued and subsequently the Assessing Officer added the said income in the hands of the assessee. In appeal, the Appellate Authority reversed the finding which was carried by the revenue by way of second appeal to the Tribunal. The Tribunal rejected the same holding that the Assessing Officer while framing the assessment of the father-in-law of the assessee, accepted that the said income was his and had considered the same in his hands and, therefore, there was no justification for considering the same in the hands of the assessee. Learned counsel for the revenue, while assailing the judgments of the two Appellate Authorities, has relied upon the judgement of the Hon'ble Supreme Court in ITO v. Ch. Atchaiah reported as 218 ITR 239. We are of the view that the CIT as well as the Tribunal having recorded a finding of fact that the FDR in question belonged to father-in- law of the assessee and not to the assessee, question of law sought to be raised does not arise. The judgment relied upon is distinguishable. Therein question was whether the Department had option not to assess the AOP when individuals had already been assessed. It was held that AOP was liable to be assessed under Section 183 of the Act, irrespective of the fact that individual members had already been assessed. We are not concerned with such a situation here. No substantial question of law arises.

The appeal is dismissed. (AJAY TEWARI) JUDGE (ADARSH KUMAR GOEL) JUDGE August 29, 2008 sunita

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