B.K. JAIN vs. COMMI. OF IT, LUDHIANA

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ITA/363/2011HC Punjab & HaryanaPHHC01095701201121 May 20143 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that all the questions in the present appeals were concluded by its order of even date in ITA No. 365 of 2011, which was against the assessee. Consequently, the High Court dismissed all the appeals. The specific reasoning for the decision in ITA No. 365 of 2011, which formed the basis for dismissing the current appeals, is not detailed in this extract. Therefore, the ratio decidendi for each of the four questions is not explicitly provided here, beyond the overarching conclusion that they were decided against the assessee in a related appeal. No issue was expressly left undecided.

What were the facts?

The appellant-assessee, a Chartered Accountant, was engaged in providing accommodation/book entries for investments and capital gains, receiving commission. Cash was deposited into various bank accounts of the assessee and family members, from which cheques were issued to clients for bogus transactions. A survey under Section 133A was conducted on June 15, 2004. The assessee filed a return of income for AY 2004-05, surrendering Rs. 15,00,000. The assessment was completed at Rs. 1,01,25,140, with additions. The CIT(A) partly allowed the assessee's appeal. Both the assessee and revenue appealed to the Tribunal. The Tribunal partly allowed the assessee's appeal and dismissed the revenue's appeal. The assessee filed the present appeal before the High Court.

What were the issues?

The High Court had to decide the following substantial questions of law: 1. Whether proceedings under Section 143(3) are sustainable when additions were made based on share broker statements taken without granting the assessee an opportunity for cross-examination, violating principles of natural justice? 2. Whether the Tribunal's order is sustainable for confirming a Gross Profit (GP) rate of 0.5% of turnover, overlooking reports from Income Tax Department officials and comparable cases? 3. Whether the Tribunal was justified in calculating turnover based on bank accounts not belonging to the assessee? 4. Whether the Tribunal was justified in concurring with the CIT(A) regarding unexplained investment of Rs. 74,04,024 and profit of Rs. 14,82,124 from share trading in the assessee's name and his mother's and son's names, rejecting the assessee's submissions and evidence without adverse findings? Assessee's contentions: The assessee argued that additions were made in violation of natural justice due to lack of cross-examination. The assessee also contended that the GP rate and turnover calculation were erroneous and that the Tribunal failed to consider evidence regarding share transactions. The revenue's contentions were not recorded in the provided text.

Which sections of the Income-tax Act were involved?

Section 260A,Section 133A,Section 143(3)

AI-generated summary — verify with the full judgment below

ITA No.363 of 2011 (O&M) 1 IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No.363 of 2011 (O&M) Date of decision:21.5.2014 B.K.Jain, 94-D, Bhai Randhir Singh Nagar, Ludhiana (Punjab) ……Appellant Vs. Commissioner of Income Tax, Ludhiana (Punjab) …..Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTAL HON’BLE MR. JUSTICE JASPAL SINGH Present: Mr. Sachin Bhardwaj, Advocate for the appellant. Ajay Kumar Mittal,J. 1. This order shall dispose of ITA Nos.363 of 2011 and 176 and 177 of 2012 as according to the learned counsel for the appellant, common questions of law are involved in all the appeals. However, the facts are being extracted from ITA No.363 of 2011. 2. ITA No.363 of 2011 has been preferred by the appellant- assessee under Section 260A of the Income Tax Act, 1961 (in short, “the Act”) against the order dated 29.4.2010, Annexure 13, passed by the Income Tax Appellate Tribunal, Chandigarh Bench (in short, “the Tribunal”) in ITA No.1096/DEL/2008, for the assessment year 2004-05, proposing to raise following substantial questions of law:- “i) Whether the proceedings concluded under Section 143(3) is sustainable in law since the addition was made by relying upon the statements of some share brokers, taken at the back of the Singh Gurbax 2014.06.13 10:54 I attest to the accuracy and integrity of this document High Court Chandigarh

ITA No.363 of 2011 (O&M) 2 assessee, qua which no opportunity of cross examination was granted to the assessee hence against the principles of natural justice? ii)Whether the order of the Tribunal is sustainable since overlooking the report of Income Tax Department officials and comparable case while confirming the GP rate of 0.5% of the turnover? iii)Whether the Tribunal is justified in calculating the turnover on the basis of bank accounts maintained by the parties which does not belong to the assessee? iv)Whether the Tribunal is justified in concurring with the order of the CIT(A) for transactions relatable to dealing in equity shares in his name and in the name of his mother and his son i.e. ` 74,04,024/- as unexplained investment and ` 14,82,124/- on account of profit of trading of shares of assessee rejecting assessee's submissions and evidences without referring any adverse finding on record?” 3. A few facts relevant for the decision of the controversy involved, as narrated in ITA No.363 of 2011, may be noticed. The appellant- assessee is a Chartered Accountant by profession and operating from his office cum residence at 94-D, Bhai Randhir Singh Nagar, Ludhiana. He is engaged in the job of giving accommodation/book entries to various persons making investments in long/short term capital gain/gifts/loans and in consideration charges commission from them. The cash received from different beneficiaries was deposited in various bank accounts of the assessee, his family members and other share brokers from where cheques were issued in favour of the clients for bogus capital gains/share profits/gifts etc. Survey operations were carried out under Section 133A of the Act at the office of the assessee on 15.6.2004. Return of income for an amount of `15,00,000/- was filed on 30.3.2005 alongwith surrender letter Singh Gurbax 2014.06.13 10:54 I attest to the accuracy and integrity of this document High Court Chandigarh

ITA No.363 of 2011 (O&M) 3 dated 1.3.2005 qua the Income of `15 lacs for the assessment year in question, `12 lacs for the assessment year 2005-06. Assessment was completed at income of `1,01,25,140/- vide order dated 29.12.2006, Annexure A.8 and certain additions were made. Aggrieved by the order, the assessee filed appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]. Vide order dated 29.9.2008, Annexure A.10, the CIT(A) partly allowed the appeal. Feeling aggrieved, both the assessee and the revenue filed appeals before the Tribunal. Vide order dated 29.4.2010, Annexure A.13, the Tribunal partly allowed the assessee's appeal and dismissed the appeal of the revenue. Hence the present appeals by the appellant-assessee. 4. We have heard learned counsel for the appellant and perused the record. 5. All the questions in these appeals stand concluded by our order of even date in ITA No.365 of 2011 (B.K.Jain, 94-D, Bhai Randhir Singh Nagar, Ludhiana (Punjab) vs. Commission of Income tax, Ludhiana (Punjab) against the assessee. Consequently, all the appeals are hereby dismissed. (Ajay Kumar Mittal) Judge May 21, 2014

(Jaspal Singh) 'gs' Judge Singh Gurbax 2014.06.13 10:54 I attest to the accuracy and integrity of this document High Court Chandigarh

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