COMMISSIONER OF INCOME TAX,LUDHIANA vs. M/S HARNAM SINGH DARSHAN SINGH

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ITA/48/2003HC Punjab & HaryanaPHHC01021554200315 March 2007Bench: MR. JUSTICE M.M. KUMAR,MR. JUSTICE RAJESH BINDAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the application of Circular No. 387 and Circular No. 556 could only be considered if there were findings by the appellate authorities (CIT(A) or ITAT) that the transactions between the assessee (a kacha arhtia) and the sellers of agricultural produce were in respect of non-agricultural items. However, the judgment notes that the CIT(A) had found no material on record to suggest that the deposits were bogus or non-genuine, which would attract the provisions of Section 269SS as it stood at the relevant time. In the absence of such findings of fact by the lower appellate authorities, the High Court concluded that no substantial question of law arose for its determination. Consequently, the appeal filed by the Revenue was dismissed. No issue was expressly left undecided.

What were the facts?

The Revenue (Commissioner of Income Tax-II, Ludhiana) filed an appeal under Section 260A of the Income Tax Act, 1961, challenging an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench, dated August 23, 2002. This ITAT order pertained to assessment year 1993-94 and upheld an order of the Commissioner of Income Tax (Appeals) which cancelled a penalty of Rs. 2,39,458/- levied under Section 271D of the Act. The penalty was imposed for alleged violations of Sections 269SS and 269T concerning six deposits made with the assessee, M/s Harnam Singh Darshan Singh, a kacha arhtia. The Revenue contended that these deposits were not related to the sale of agricultural produce and thus not covered by Board Circulars No. 387 and 556.

What were the issues?

1. Whether in law, the ITAT was correct in upholding the CIT (Appeals) order cancelling the penalty of Rs. 2,39,458/- under Section 271D of the Income Tax Act, 1961, by disregarding the provisions of Sections 269SS/269T, given that the deposits were not related to the sale of agricultural produce through the assessee and therefore not covered by Board's Circular No. 387 dated 6.7.1984 and No. 556 dated 23.2.1990? (Question of law). Assessee's Contentions: Not recorded in the judgment. Revenue's Contentions: The Revenue argued that the ITAT was incorrect in cancelling the penalty. They contended that the deposits in question were not related to the sale of agricultural produce through the assessee and therefore the benefit of Board Circulars No. 387 and 556 was not available. They implicitly argued that Sections 269SS and 269T were violated, justifying the penalty.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271D,Section 269SS,Section 269T

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 48 of 2003 DATE OF DECISION: 15.03.2007 Commissioner of Income Tax-II, Ludhiana …Appellant Versus M/s Harnam Singh Darshan Singh, Near Grain Market, Khanna …Respondent CORAM: HON’BLE MR. JUSTICE M.M. KUMAR HON’BLE MR. JUSTICE RAJESH BINDAL Present: Mr. Sanjeev Bansal, Advocate, for the appellant-revenue. M.M. KUMAR, J. (Oral) The revenue has approached this Court by filing the instant appeal under Section 260A of the Income Tax Act, 1961, challenging the view taken by the Income Tax Appellate Tribunal, Chandigarh Bench, Chandigarh, in ITA No. 931/Chandi/96, dated 23.8.2002, in respect of assessment year 1993-94. It has been claimed that the following substantial question of law would arise for our determination:- “Whether in law, the ITAT, Chandigarh Bench, Chandigarh, was correct in upholding the CIT (Appeals) order, cancelling the penalty of Rs. 2,39,458/- u/s 271D of the I.T. Act, 1961, totally disregarding, the provisions

I.T.A. No. 48 of 2003 of section 269SS/269T which are applicable in the case of all six deposits with the assessee as the deposits under reference were not related to sale of agricultural produce through the assessee to be covered by the Board’s Circular No. 387 dated 6.7.1984 and No. 556 dated 23.2.1990.” We have heard learned counsel for the revenue and find that the application of Circular No. 387, dated 6.7.1984 and Circular No. 556, dated 23.2.1990, could be considered only if there are findings returned by the Appellate Authority, namely, Commissioner of Income Tax (Appeals) or by the Tribunal that the transaction between the assessee, who is kacha arhtia, and the seller of the agricultural produce are in respect of non-agricultural items. On the contrary the findings recorded by the CIT (A) is that there is nothing on record to show that the deposits were bogus and non-genuine so as to attract the provisions of Section 269SS of the Act as it stood on the relevant date. In the absence of such findings of fact, no question of law would arise much less any substantial question of law. Dismissed. (M.M. KUMAR) JUDGE (RAJESH BINDAL) March 15, 2007 JUDGE Pkapoor 2

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