High Court Of Punjab & Haryana
CIT vs. Harjit Singh
Section 158BB, 158BD, 158BFA(1), 260A
Adarsh Kumar Goel & Mrs. Daya Chaudhary, JJ.
IT Appeal No. 79 of 2009
4th August, 2009
Counsel Appeared :
Rajesh Katoch, for the Revenue : Rajiv Sharma, for the Assessee
JUDGMENT
ADARSH KUMAR GOEL, J. :
The Revenue has preferred this appeal under s. 260A of the IT Act, 1961 (for short, “the Act”) against the order dt. 23rd May, 2008 passed by the Tribunal, Delhi Bench ‘I’ New Delhi in ITA No. 243/Del/2005 for the block assessment 1st April, 1989 to 31st March, 1999, proposing to raise the following substantial questions of law :
“(A) Whether on the facts and in the circumstances of the case learned Tribunal was right in law in restoring the issue of undisclosed investment of Rs. 3,77,041 based on material seized during search (Document No. A-12 pp. 3 and 4) on account of purchase of Maruti Gypsy Car, back to the file of AO, whereas the assessee did not produce any details/evidence before the learned CIT(A) or the AO despite opportunities allowed by both of them.
(B) Whether on the facts and in the circumstances of the case learned Tribunal was right in law in upholding the order of learned CIT(A) in restricting the addition to Rs. 1,30,000 instead of Rs. 7,75,000 made by the AO as undisclosed investment in M/s Sabharwal International based on partner’s statement, in the absence of any evidence to the contrary produced by the assessee.
(C) Whether on the facts and in the circumstances of the case, learned Tribunal was right in law in restoring the issue of charging interest under s. 158BFA(1) to the file of AO, whereas charging of interest under s. 158BFA(1) is mandatory in nature.”
2. On the basis of some documents found from search under s. 132(1) of the Act on 12th March, 1999, at the premises of Inderjit Singh Sabharwal, relative of the assessee, notice under s. 158BD was issued. In response, the assessee declared his undisclosed income to be ‘nil’. The AO assessed income on the basis of unexplained investment in the purchase of car, unexplained investment in the firm M/s Sabharwal International and directed that interest be recovered under s. 158BFA(1). The CIT(A) upheld the assessment attributable to investment in purchase of car but partly deleted the addition in respect of the investment in M/s Sabharwal International and also upheld levy of interest. The Tribunal remanded the matter to the AO in respect of purchase of car and levy of interest but upheld part deletion towards investment in M/s Sabharwal International. Relevant part of the finding recorded by the Tribunal is as under : “We have considered the rival contentions and found from the record that assessee has got Maruti Gypsy through M/s Som Dutt Financer Ltd., and also paid margin money of
10 per cent. However, due to default in payment on finance instalments, the vehicle was taken back by the financier and, therefore nothing was alleged to be paid subsequently. There is no dispute to the well settled legal proposition that onus lies on the assessee to substantiate the entries found recorded in seized material. In the instant case, claim made with reference to the return of vehicle by the finance company and the fact that only margin money was paid, was on the assessee. If only margin money is paid and the assessee defaults in the very beginning resulting in taking over of vehicle by the finance company, no amount is required to be paid thereafter, therefore, there is no reason for making any addition by assuming that instalments were paid by the assessee. In the interest of justice and fair play, we restore this ground to the file of the AO and the assessee is directed to furnish complete details with regard to the actual payment made towards initial margin and instalments and to file confirmation from the finance company with regard to the actual amount paid, thereafter the AO is to decide the matter afresh.” “The CIT(A) in his order quoted exactly the statement of Shri Surjit
Singh, wherein he has stated that total capital investment at the commencement of business was around Rs. 6 lacs and his contribution to the capital of the firm was around Rs. 1 lacs. It was also stated that the other partner has also contributed similar amount of Rs. 1 lacs . On the basis of these statements, the CIT(A) has restricted the addition of Rs. 6 lacs to the extent of Rs. 1 lacs, and in respect of furniture etc., in place of addition of Rs. 1.75 lacs, a sum of Rs. 30,000 was retained. As the assessee’s share of investment in such assets were found to the extent of Rs. 30,000, the CIT(A) retained total addition to the extent of Rs. 1.30 lacs in place of Rs. 5.75 lacs. We do not find any reason to interfere in the order of CIT(A) for restricting the addition of Rs. 1,30,000 which is as per material on record.” “Before levying such penal interest, default on the part of the assessee is required to be established, unless such default if attributable on the part of the assessee, the Revenue cannot penalize the assessee for no default on him. Since this interest is penal in nature, the Department cannot be allowed to say that levy of interest under s. 158BFA(1) is automatic. There is no dispute to the well settled legal proposition that penal provisions of the Act should not be construed in a manner to make them an instrument of operation. They levy of penalty is to be seen in the backdrop of the nature and reasons for which penalty is imposed, unless there is any default on the part of the assessee or there is a lack of bona fide the Department cannot effectuate the penal provisions.”
We have heard learned counsel for the parties. We are of the view that the findings recorded by the Tribunal are findings of fact based on appreciation of evidence. Moreover, as regards investment in purchase of car and interest, the matter has only been remanded for giving further opportunity to the assessee, having regard to the circumstances of the case.
No substantial question of law arises. The appeal is dismissed.
[Citation : 329 ITR 422]
