Delhi H.C : Whether Tribunal confir additions under section 69A of the Act when the additions had been made by the Revenue under section 68

High Court Of Delhi

Faiz Murtuza Ali Vs. CIT

Assessment Year : 2002-03

Section : 69A

A.K. Sikri And M.L. Mehta, JJ.

IT Appeal No. 892 Of 2009

Assessment Year 2002-03

May  10, 2011

JUDGMENT

1. Admit, on the following substantial questions of law :

“(1) Whether the hon’ble Tribunal was correct in law in confirming the additions even after holding that the provisions of section 68 of the Act do not apply to the case of the assessee ?

(2) Whether the hon’ble Tribunal was correct in law and well within its powers in making the additions under section 69A of the Act when the additions had been made by the Revenue under section 68 of the Act and it was not the case of the Revenue that the additions shall be made under section 69A, more so disregarding the decision of the co-ordinate Bench reported at Jawahar Lal Oswal v. Asst. CIT [1999] 71 ITD 324 (Chandigarh) ?

(3) Whether the hon’ble Tribunal was correct in law in disregarding the evidence as contradictory instead of appreciating the evidence harmoniously ?”

2. While carrying out the assessment of the assessment year 2002-03, the Assessing Officer made additions aggregating to Rs. 55 lakhs deposited in the bank account of the appellant/assessee herein by invoking the provisions of section 68 of the Income-tax Act. There were four additions in the sums of Rs. 20 lakhs, Rs. 20 lakhs, Rs. 5 lakhs and Rs. 10 lakhs respectively making a total of Rs. 55 lakhs. The Commissioner of Income-tax (Appeals), however, deleted these additions on the ground that the provisions of section 68 of the Act were not applicable as well as on the merits. The Revenue went in appeal. The Income-tax Appellate Tribunal allowed the appeal of the Revenue by reversing the order of the Commissioner of Income-tax (Appeals). Though the Tribunal accepted that the provisions of section 68 were not applicable, it sustained the additions invoking the provisions of section 69A of the Act. Thereafter, each of the additions was discussed and the findings of the Commissioner of Income-tax (Appeals) were reversed sustaining the additions made by the Assessing Officer. Because in these circumstances, the present appeal is preferred by the assessee challenging the order dated October 17, 2008, passed by the Tribunal, we may, however, point out that, at the outset before us only one addition to the tune of Rs. 20 lakhs sustained by the Income-tax Appellate Tribunal is challenged and, therefore, we would confine our discussions to that addition alone and the said addition came to be made by the Assessing Officer under the following circumstances.

3. As noted above, this amount of Rs. 20 lakhs also seemed to be deposited in the bank account of the assessee herein. The explanation of the assessee qua this amount was that he had entered into an agreement for development of property “Hasan Manzil” at Patna on December 2, 2000, which was registered with the Registrar vide serial No. 38096. It was submitted by the appellant before the Assessing Officer that under the said agreement, the assessee had received a sum of Rs. 25 lakhs from the said developer, namely, Ganpati Builder whose sole proprietor is Mr. Jagdeep Prasad Verma. It was also stated that Rs. 5 lakhs was received by the assessee by means of cheque and balance of Rs. 20 lakhs in cash. However, the development agreement fell through and was cancelled subsequently, as a result, the assessee was paid back the amount of Rs. 25 lakhs on September 26, 2001 by means of bank drafts of (Rs. 9 lakhs + 9 lakhs + 7 lakhs) respectively. The assessee had also submitted the documents to support his plea in the form of development agreement, copies of the bank drafts and certain letters/correspondence written by Ganpati Builder.

4. The Assessing Officer, however, did not accept the aforesaid version of the assessee and made the additions, which were deleted by the Commissioner of Income-tax (Appeals) but were restored by the Tribunal. The order of the Tribunal indicates that it has taken into consideration the said documents including the letters written by Ganpati Builder and on the basis thereof has arrived at the finding that the amount of Rs. 20 lakhs allegedly received in cash by the assessee from Ganpati Builder was never received and on this basis, addition is made. We are not commenting upon the analysis of the evidence as recorded/undertaken by the Tribunal. Suffice to state that in the aforesaid backdrop, before the Assessing Officer, or for that matter, the Income-tax Appellate Tribunal discarded the evidence produced by the assessee, in the facts of this case, it was incumbent upon the Assessing Officer to have at least summoned Mr. Jagdeep Prasad Verma proprietor of Ganpati Builder to find out whether there was any such agreement signed on the letters in question written by him or not. We say so because of the following reasons :

(i) Clause 32 of the agreement reveals that a sum of Rs. 5 lakhs was only received by the assessee from Ganpati Builder by means of cheque at the time of signing of the agreement. However, on the last page of the agreement, there is an endorsement by the assessee, as per which, he received a further sum of Rs. 20 lakhs in cash on April 2, 2001. This is not accepted by the Tribunal on the ground that the same is returned by the assessee alone and it is not verified by Mr. Jagdeep Prasad Verma. In these circumstances, whether a sum of Rs. 20 lakhs in cash was received by the assessee from Mr. Jagdeep Prasad Verma could have been ascertained by summoning.

(ii) The assessee had also placed on record a letter dated September 26, 2001, purportedly written by Mr. Jagdeep Prasad Verma to the Acting Chairman, Bihar State Shia Waqf Board, Abedin House, Fraser Road, Patna. This letter mentions about the builder’s agreement and further states that he has received back a sum of Rs. 25 lakhs, which was paid as advance. The Assessing Officer discarded this evidence as well. Again, before doing so, it would have been appropriate to summon Mr. Jagdeep Prasad Verma to find out whether he had written such a letter or not and/ or sum of Rs. 25 lakhs received by him by means of cheque/draft was towards the refund of the amount of Rs. 25 lakhs (Rs. 5 lakhs + 20 lakhs) paid by him, that is, whether he had paid the said sums of Rs. 25 lakhs including Rs. 20 lakhs in cash at all or not.

5. For these reasons, we answer the question in favour of the assessee. As a result, we set aside the impugned order passed by the Tribunal as well as the Assessing Officer and remit the case back to the Assessing Officer to enquire into the matter afresh by summoning Mr. Jagdeep Prasad Verma. If the Assessing Officer is convinced that the addition is to be made, it would be open to the Assessing Officer to take a view as to whether the addition is to be made under section 68 or section 69A of the Act.

6. The appeal stands disposed of.

[Citation : 334 ITR 370]

Leave a Comment

Scroll to Top
Malcare WordPress Security