IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
ITA No. 79 of 2009 (O&M)
Date of decision: 4.8.2009
Commissioner of Income-Tax, Faridabad
......Appellant
Vs.
Mr.Harjit Singh,
Prop. M/s Sabarwal International,
...Respondent
CORAM:- HON'BLE MR.JUSTICE ADARSH KUMAR GOEL
HON'BLE MRS.JUSTICE DAYA CHAUDHARY
PRESENT: Mr.Rajesh Katoch, Standing Counsel for revenue.
Mr.Rajiv Sharma, Advocate for the assessee.
****
ADARSH KUMAR GOEL, J. (Oral)
1. The revenue has preferred this appeal under Section260A of the
Income Tax Act, 1961 (for short, “the Act”) against the order dated
23.5.2008 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘I’
New Delhi in ITA No. 243 /DEL/2005 for the Block Assessment 1.4.1989 to
31.3.1999, proposing to raise the following substantial questions of law:
A. “Whether on the facts and in the circumstances
of the case Ld. ITAT 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 pages 3 and 4) on
account of purchase of Maruti Gypsy Car, back to
the file of Assessing Officer, whereas the assessee
did not produce any details/evidence before the
ITA No. 79 of 2009 -2-Ld.CIT(A) or the Assessing Officer despite
opportunities allowed by both of them.”
B. “Whether on the facts and in the circumstances
of the case Ld. ITAT was right in law in
upholding the order of Ld. CIT(A) in restricting
the addition to Rs.1,30,000/- instead of
Rs.7,75,000/- made by the Assessing Officer 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, Ld.ITAT was right in law in
restoring the issue of charging interest u/s 158
BFA(1) to the file of Assessing Officer,
whereas charging of interest u/s 158 BFA(1) is
mandatory in nature.”
2. On the basis of some documents found from search under
Section 132(1) of the Act on 12.3.1999, at the premises of Inderjit Singh
Sabharwal, relative of the assessee, notice under Section 158 BD was
issued. In response, the assessee declared his undisclosed income to
be ‘Nil’. The Assessing Officer 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
ITA No. 79 of 2009 -3-
recovered under Section 158 BFA(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 Assessing
Officer 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 Zipsy through M/s Som Dutt
Financer Ltd., and also paid margin money
of 10% . However, due to default in
payment on finance instalments, the vehicle
was taken back by the financer 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
ITA No. 79 of 2009 -4-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 Assessing
Officer and the assessee is directed to
furnish complete details with regard to the
actual payment made towards initial margin
and instalemnts and to file confirmation
from the finance company with regard to the
actual amount paid, thereafter the Assessing
Officer is to decide the matter afresh.”
xx xx xx xx
xx xx xx xx
“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 lac. It was also
stated that the other partner has also
contributed similar amount of Rs.1 lac. ON
ITA No. 79 of 2009 -5-the basis of these statements, the CIT(A) has
restricted the addition of Rs.6 lascs to the
extent of Rs.1 lac, 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.7.75 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.”
xx xx xx
xx xx xx
” 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 ofd the assessee, the
revenue cannot penalize the assess for no
default on him. Since this interest is penal in
nature, the department cannot be allowed to
say that levy of interest under Section
158BFA(1) is automatic. There is no dispute
ITA No. 79 of 2009 -6-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 back drop 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 effectuate4
the penal provisions.”
3. We have heard learned counsel for the parties.
4. 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.
5. No substantial question of law arises.
6. The appeal is dismissed.
(ADARSH KUMAR GOEL)
JUDGE
(DAYA CHAUDHARY)
August 4, 2009 JUDGE
raghav
Note: Whether this case is to be referred to the Reporter? ……..Yes/No
ITA No. 79 of 2009 -7-