C.I.T. JDR. vs. M/S KHAZAN SINGH & ORS.

JUDGMENT M.M. KUMAR, J. The revenue has approached this Court against the order dated 25.6.1993, passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar, in I.T.A. No. 625(ASR)/1992, in respect of the assessment year 1982-83. The revenue has claimed that the following substantive question of law would arise for determination of this Court:- “Whether on the facts and in the circumstances of the case, the Ld. ITAT is right in law in computing the assessee’s income at Rs. 55,000/- as against the income of Rs. 6,18,150/- estimated by the Income-tax Officer?”

Before adverting to the submissions made on the controversy raised, few facts are necessary to notice as flows from the statement of the case. The respondent-firm was engaged in the business of purchase and sale of auto spare parts in respect of the year under reference. It had headquarter at Jalandhar and Branch Office at Kapurthala. There were three partners, namely, Shri Gurbax Singh, father and his two sons Sarvshri Manjit Singh and Amrik Singh. On the inspection undertaken by the Excise and Taxation Department, Jalandhar, on 21.10.1982, a pocket diary was impounded and its possession was taken by the Income-tax Department by placing reliance on the provisions of Section 132A of the Act. In other words, the diary was requisitioned by the competent authority. The assessee filed its return on 7.4.1983, declaring its income at Rs. 14,240/- and best judgment under Section 144 of the Act was framed on 21.3.1985 at Rs. 4,97,180/-. The order of the Assessing Officer was set aside by the CIT (A), vide his order dated 25.11.1985 and accordingly de novo assessment was to be framed. Thereafter fresh assessment was framed under Section 143(3) of the Act on 21.3.1985 and finally an addition of Rs. 5,65,300/- was made in the assessment on account of un-explained investment, which was based on the pocket diary requisitioned by the revenue under Section 132A of the Act. The Assessing Officer, vide his order dated 8.2.1991 (Annexure ‘A’), invoked the provisions of Section 145(2) of the Act and the version of the assessee was rejected altogether. The CIT (A), vide its order dated 23.4.1992, upheld the assessment framed by the Assessing Officer and also his action of invoking the provisions of Section 145(2) of the Act. Accordingly, addition of Rs. 5,65,300/- was confirmed. On further appeal filed by the assessee, the matter was considered by the Tribunal and it took the view that the diary seized during inspection of the premises of the assessee could not constitute a basis for making addition of Rs. 5,65,300/-. The Tribunal in its order dated 25.06.1993 unequivocally condemned the approach adopted by the CIT (A) in para 6.1 and 6.2 in its order dated 23.4.1992. The Tribunal after quoting para 6.1 and 6.2 from the order of the CIT (A), held as under:- “16. In view of the above, the basic question would be as to what inference should be drawn on the given facts. As it is, the Assessing Officer and the CIT (A) have not appreciated the assessee’s contention and the written submissions that entries were imaginary particularly the fact that neither any shoguns was taken nor there was any girl by the name of Dolly in whose marriage expenses were incurred. Further no plot had been purchased on which expenses could be incurred. Again the assessee had in terms stated and asserted that not only no “Deshi Sharab Theka” had been taken by the firm or any other partners but enquiries in this regard had been made by the Income-tax Department from the Excise Department also and not only there has been no contradiction but there is no reference to such submissions which shows that the assessee’s version could not be said to be wrong and frivolous. All these facts would project that it is a case where the assessee has been a victim of circumstances most of which may be resulting from his own action but certainly the firm should not have been visited with the type of assessment framed. xxx xxx xxx xxx xxx xxx xxx xxx xxx