COMMISSIONER OF INCOME TAX vs. M/S SENIOR RUBBER FACTORY

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ITA/33/2001HC Punjab & HaryanaPHHC01042074200124 September 2001Bench: MR. JUSTICE HEMANT GUPTA,MR JUSTICE JASWANT SINGH3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that no substantial question of law arises for consideration. The Court affirmed the concurrent findings of the lower authorities that the appellant (assessee) had not disclosed the source of credit in the names of the minor children. It was further held that the benefit of the Amnesty Scheme could not be claimed by the minors without declaring the sources of their income. The Tribunal's finding that the amounts were introduced in the names of minor children, none of whom had an independent source of income, and that no evidence of gifts was established, was upheld. The uncontroverted position was that the source of credits in the names of the minor children had not been established. Consequently, the appeals were dismissed.

What were the facts?

The assessee, M/s Lamba Builders, is in appeal before the High Court against the orders of the Income Tax Appellate Tribunal (ITAT) for Assessment Years 1987-1988 and 1988-1989. The dispute concerns cash credit entries in the names of four minor children of the partners, which were added to the firm's income by the Assessing Officer (AO) as unexplained. The AO noted that the minors had previously declared amounts under an Amnesty Scheme for Assessment Years 1984-1987, but found no evidence of gifts received by them and that the scheme was not for declaring income belonging to another person. The Commissioner of Income Tax (Appeals) and the ITAT affirmed the AO's findings, holding that the minors had no independent source of income and the source of the credits was not established.

What were the issues?

1. Whether the cash credit entries in the names of minor children, who had no independent source of income and were in the age group of 4 to 17 years, are unexplained and thus exigible to tax in the hands of the firm, particularly when no evidence of gifts received was produced by the assessee? (Question of law and fact, concerning Section 68 of the Income Tax Act, 1961). Assessee's contentions: The assessee argued that the amounts represented gifts received by the minors. The judgment does not record specific arguments made by the assessee before the High Court beyond raising the same arguments as before the Tribunal. Revenue's contentions: The revenue contended that there was no evidence of gifts received by the minors, and the Amnesty Scheme was not applicable for declaring income belonging to another person. The AO relied on the Supreme Court judgment in M/s Jamna Parshad Kanhya Lal vs. CIT. The ITAT found that the minors had no independent source of income and the source of credits was not established.

Which sections of the Income-tax Act were involved?

Section 68

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of decision: 19.9.2011 (i) ITA No. 33 of 2002 M/s Lamba Builders …..Appellant vs. Commissioner of Income Tax, Rohtak and another …..Respondents (ii) ITA No. 34 of 2002 M/s Lamba Builders ….. Appellant vs. Commissioner of Income Tax, Rohtak and another …..Respondents CORAM: - HON’BLE MR. JUSTICE HEMANT GUPTA HON’BLE MR. JUSTICE JASWANT SINGH Present: - Mr. Akshay Bhan, Advocate for the appellant. Mr. Yogesh Putney, Advocate for respondents. HEMANT GUPTA, J This order shall dispose of ITA No. 33 of 2002 pertaining to Assessment year 1987-1988 and ITA No. 34 of 2002 pertaining to Assessment year 1988-1989, whereby the cash credit entries in the name of minors were found to be unexplained and thus added in the income of the firm. Prior to the Assessment years, in question, four minor children i.e., Baby Payal, Vimmi, Master Hunny and Baby Nancy declared certain amount for taxation under the

ITA No. 33 of 2002 Amnesty Scheme for the Assessment year 1984-1985, 1985- 1986 and 1986-1987. Learned Assessing Officer found that there is no evidence with regard to the receipt of gifts etc., by the minors and that the Amnesty Scheme was applicable to the persons who have not declared their income. The Scheme was not applicable for declaring the income in respect of another person though cash income belongs to a different person. The Assessing Officer relied upon a judgment of Hon’ble the Supreme Court reported as 130 ITR 244, M/s Jamna Parshad Kanhya Lal vs. CIT that immunity was conferred to the declarant and that there was investigations into the true nature and source of the credits. On the basis of the said fact, the Assessing Officer found that the cash credit entries in the name of four minors in the books of the firm are unexplained and were thus added to the income of the firm. In appeal, the Commissioner of Income Tax (Appeals) on 17.6.2001 returned a finding that the Amnesty Scheme could not be availed by the minors who have not earned any income and therefore, the arguments of the assesses based upon the furnishing of declaration by the minors in the Amnesty Scheme was negated. In further appeal, learned Income Tax Appellate Tribunal, Chandigarh affirmed the findings and found that assesses have introduced their unaccounted income in the form of credits in the book of accounts of the firm. The Tribunal returned the following findings: - 2

ITA No. 33 of 2002 “….In this case, it is obvious that amounts have been introduced in the names of minor children of the partners. It is also established that none of the children had an independent source of income and they were in the age group varying from 4 to 17 years. The claim of the assessee that amounts represented gifts received in view of the fact that no evidence whatsoever has been established. Thus, the uncontroverted position emerging from the facts of the case is that source of credits in the names of minor children has not been established.” Before this Court, learned counsel for the appellant has raised the same arguments as were raised were before the Tribunal. We do not find that any substantial question of law arises for consideration in view of the findings recorded that the appellant have not disclosed the source of credit in the name of minor children and that the benefit of Amnesty Scheme could not be claimed by the minors without declaring the sources of their income. Dismissed. (HEMANT GUPTA) JUDGE (JASWANT SINGH) JUDGE 19.9.2011 preeti 3

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