High Court Of Punjab & Haryana
Surinder Kumar vs. ITO
Section 69A, 260A
Asst. Year 1996-97
Adarsh Kumar Goel & Mrs. Daya Chaudhary, JJ.
IT Appeal No. 90 of 2008
29th July, 2009
Counsel appeared :
K.L.Goyal with Manoj Rohilla, for the Appellant : Aman Bansal, for the Respondent
JUDGMENT
ADARSH KUMAR GOEL, J. :
The assessee has preferred this appeal under s. 260A of the IT Act, 1961 (for short, “the Act”) against the order dt. 31st May, 2007 passed by Tribunal, Delhi Bench-I, Delhi in ITA No. 1692/Del/2005 for asst. yr. 1996-97, proposing to raise the following substantial questions of law :
“(i) Whether on the basis of reasons recorded by the AO to the effect that the assessee has purchased FDRs in a bank during a particular assessment year, proceedings under s. 147 of the IT Act can be initiated without recording a specific finding that these investments are out of income, which escaped assessment ?
(ii) Whether provisions of s. 69A of the Act ibid relating to unexplained money can be invoked for treating any amount, as income of a particular assessment year, when no actual money was found in possession of the assessee during that period ?
(iii) Whether the Departmental authorities can partly reject and partly accept the explanation made by an assessee, relating to money available in asst. yrs. 1994-95 and 1995-96 when that explanation together in same contest disclosing true facts relating to money held by him in the past, which was invested in the banks in subsequent assessment years ?
(iv) Whether the learned Tribunal is justified in upholding the action of authorities below that the income of Rs. 6,96,500 is assessable during asst. yr. 1996-97 as cash available (opening balance) on 1st April, 1995, under s. 69A of the Act ibid ?”
2. The assessee purchased FDRs. Two of the said receipts were purchased for the asst. yr. 199697, which is the year in question and two receipts were purchased for the subsequent year. The income which led to the said investment was not disclosed. The AO initiated assessment proceedings on acquiring information about the said FDRs and after following the necessary procedure, held that the amount invested in the said FDRs represented undisclosed income and made addition accordingly. The plea of the assessee that the amount represented saving of the assessee was rejected. The addition has been upheld by the CIT(A) as well as the Tribunal. The Tribunal observed : “We have carefully considered the submissions of both the parties. In this case, the entire dispute revolves around as to whether or not the assessee has satisfactorily explained the investment made in the FDRs of Rs. 1,50,000 each on 9th June, 1995 and 14th Aug., 1995. The explanation for the source of the funds is ostensibly the availability of cash in hand with the assessee as at the beginning of the previous year under consideration i.e., 1st April, 1995. According to the assessee, the said sum has been carried over from the earlier year. The AO has noted that as on 1st April, 1995, the assessee was only 19 years old and was not having any source of income and neither the assessee has filed any IT return for any of the prior years. The AO has further noted that assessee in the assessment proceedings for the asst. yrs. 1998-99 to 2000-01 has admitted that prior to the impugned assessment year, he was only a student and was not gainfully employed. The AO further noted that the assessee admitted that he was not maintaining any regular books of account. All these factors have been noted by the AO at p. 3 of his order under points (i) to (v). The AO has specifically noted that there was no evidence with regard to the source of income which has enabled the assessee to build up a cash in hand of Rs. 6,96,500. The explanation thus offered by the assessee has been found to be unsatisfactory by the AO as well as by the CIT(A). Before us, the assessee has not rebutted any of the factors which have enabled the AO to hold the explanation regarding the source of addition of Rs. 6,96,500 as unsatisfactory. The plea of the assessee, based on the judgment of the Hon’ble Delhi High Court in the case of Om Parkash Mahajan (supra) does not help the case of the assessee. We have perused the said decision. In that case, the wife of the assessee had disclosed on 30th March, 1966 a sum of Rs. 10,000 under the VDIS. A credit for such amount was found in assessee’s books of account on 4th April, 1966. The assessee explained that such amount represented the monies available with his wife as on 30th March, 1966. The Tribunal held that the immediate source and nature of the cash credit stood explained and held that the amount obviously has been in existence as on 30th March, 1966. Therefore, no addition could be made in the hands of the assessee for treating the credit as unexplained in the asst. yr. 1967-68. In that case the entire issue rested on the fact that the Tribunal accepted the explanation to the extent that the amount was in existence as on 30th March, 1966 though, it did not accept the fact that, it belonged to the wife of the assessee. However, as a natural corollary, the Tribunal deduced that it could not have been earned in the accounting period relevant to asst. yr. 1967-68 was in this background the Hon’ble High Court opined that where explanation that the entry in assessee’s accounts relates to income earned in some earlier period and not in the accounting period to which the account relates is accepted, the presumption in s. 68 of the Act, does not apply and the amount cannot be taxed in the instant year.
The ratio of the decision cannot be applied to the facts of the instant case. In the present case, in contrast, the explanation of the assessee that the said sums represented monies earned in the period upto 31st March, 1995 has not been found to be satisfactory. In the case before the High Court, the VDIS declaration in the prior period was accepted which provided the support to the explanation furnished by the assessee. There is no material in this case to justify the source of income of the assessee upto 31st March, 1995. Thus, the presumption of the Revenue to treat the income represented by Rs. 6,96,500 as taxable in the instant year cannot be doubted. Hence, on this aspect, the assessee has to fail.” We have heard learned counsel for the parties. Learned counsel for the appellant submitted that the addition was not justified. Merely because the explanation of the assessee was not acceptable was no ground to made addition, as addition under s. 69 of the Act was in the discretion of the AO and was not imperative. He relied upon the judgment of the Hon’ble Supreme Court in CIT vs. Smt. P.K. Noorjahan (1999) 155 CTR (SC) 509 : (1999) 237 ITR 570 (SC) and submitted that in that case, having regard to the age of the assessee, it was observed that the assessee could not have any source of income and the view taken by the Tribunal and the High Court in that case that addition was not called for, was upheld.
It was also submitted that the investment in the form of FDRs for the asst. yr. 1997-98 could not be included in the income of the year 1996-97. This aspect has also been duly considered by the CIT(A) and the Tribunal and the findings recorded cannot be held to be perverse. We do not find any merit in the submission. Whether in a given situation, case was made out for making addition of income which could not be explained by the assessee, was a question of fact. In the present case, the findings having been recorded by the AO, CIT(A) as well as the Tribunal that the assessee had unexplained income which could be added to taxable income, cannot be held to be perverse merely because the assessee was aged 19. In view of the above, the substantial questions of law proposed are mere questions of fact. No substantial question of law arises. The appeal is dismissed.
[Citation : 326 ITR 21]
