CIT vs Sadhana Jain

This is the Departments appeal u/s 260A of the IT Act, 1961 challenging the order of the Tribunal dt. 5-4-2005 in ITA No. 2966/Del/2002 for the assessment year 1995-96.

On 8-5-2009, the appeal was admitted on the following questions of law as framed in the memo of appeal:

"1. Whether on the facts and in the circumstances of the case, the Tribunal is justified in law in deleting the addition of Rs. 70,02,178 made u/s 69A of the Act ignoring the fact that the assessee failed to discharge the burden which lay on assessee when she claimed that she purchased shares on credit from different 207 persons for Rs. 91,37,900?

Whether on the facts and in the circumstances of the case, if the assessing officer had failed to discharge the onus which had shifted on him, the addition could not be deleted by the Commissioner (Appeals) without the exercise of powers u/s 250(4) of the Act and in that event, the Tribunal was under a legal obligation to restore the issue to the file of the AO/CIT (A) for the inquiry afresh ?"

Briefly stated, the facts are that the respondent-assessee is stated to have purchased certain shares of M/s. Electra Exports Ltd. worth Rs. 91,37,900 from 207 persons during the financial year 1994-95 relevant to the assessment year 1995-96. In the return for the year 1994-95, the assessing officer however, sought to make an addition of this amount of Rs. 91,37,900. On the request of the assessee when notices were handed over to the assessees representative and no response was received from the persons who were stated to have sold the shares of M/s. Electra Exports Ltd. the burden of proof which stood on the assessee was held to have remained undischarged. Aggrieved by the order of the assessing officer, the assessee preferred an appeal before the Commissioner (Appeals) who having examined the matter recorded a clear finding that the list of persons from whom the shares had been purchased had already been disclosed by the assessee in her books of accounts and, therefore, the amount of transaction, its date and the address of the persons could have been verified from these details and, therefore, the assessee had discharged its burden of disclosing the names from whom she had purchased the shares. It was further held that the assessing officer had proceeded to make the addition of Rs. 91,37,900 u/s 69A of the IT Act though burden of proof of the assessee stood discharged.

It was in the context of the specific provisions of section 69A that the Commissioner (Appeals) held that since the entire transaction had already been entered in the books of account which could have easily been verified by the assessing officer, therefore, the initial burden which lay on the assessee stood discharged. The Commissioner (Appeals), therefore, allowed the appeal of the assessee. Aggrieved the Department approached the Tribunal. The Tribunal has also in para 6 of its order recorded a clear finding of fact that the assessing officer had handed over the summons to the assessees representative and when there was no response from the persons who were stated to have sold the shares to the assessee, the assessing officer proceeded to make the addition u/s 69A of the IT Act. The Tribunal held that the details of the shares with distinctive numbers which were transferred by the company in the name of the assessee, the details of payments, such as, cheque numbers and date were given which could have been verified from the banks and the complete address of the sellers obtained. The assessing officer instead ignored the details and other evidence available on record and made the additions. The Tribunal, therefore, on the overwhelming evidence on record dismissed the appeal of the Department.

We have considered the submissions made by Shri Dhananjay Awasthy, learned counsel appearing for the Revenue. No one has appeared on behalf of the assessee.

The provisions of section 69A of the IT Act read as under:

"69A. Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the assessing officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year."

The provisions of section 69A are explicit and come into play when in a particular assessment year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money bullion, jewellery and other article is not recorded in the books of account and the assessee is unable to give any explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable articles.

In the present case the findings of fact are clearly against the Revenue that the details and other evidences in the nature of cheques, their dates, amounts, particulars of banks and addresses of the persons who are stated to have sold the shares, which have also been transferred by the company in the name of the assessee and, therefore, the burden which initially lay upon the assessee stood effectively discharged and, therefore no addition ought to have been made.

In view of the above, the answer to the substantial questions of law is in favour of the assessee and against the Department.

In the result the appeal filed by the Department is dismissed.