Commissioner of Income Tax vs Karaj Singh

Ajay Kumar Mittal, J.—This appeal u/s 260A of the income tax Act, 1961 (for short "the Act") has been filed by the revenue against the order dated 2.11.2004, passed by the Income Tax Appellate Tribunal Amritsar Bench, Amritsar (in short "the Tribunal") in ITA No. 60/ASR/2000, relating to the assessment year 1992-93. The appeal was admitted for determination of the following substantial question of law by this court:

Whether the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar was right in deleting the addition made u/s 68 on account of unexplained cash credit to the tune of Rs. 1,50,000

The facts, in brief, necessary for adjudication as narrated in the appeal, are that the assessee filed return for the assessment year 1992-93 on 22.4.1993 declaring income at Rs. 66,090. On a complaint received, the matter was investigated and it was found that the assessee had introduced his own secret funds to the tune of Rs. 1,50,000 through one Naresh Kapoor who first deposited that money in his account opened in the name of M/s. City Enterprises, Jalandhar and later on got prepared a bank draft in the name of the assessee on the pretext of foreign remittance and same was given to the assessee. Subsequently, proceedings u/s 147 of the Act were issued and notice u/s 148 of the Act was issued to the assessee on 10-7-1996 and in response to which the assessee filed return on 27-1-1997 declaring an income of Rs. 66,086. The assessment u/s 143(3) read with section 147 of the Act was completed on 30-12-1998 and consequently the Assessing Officer vide order dated 30-12-1998 made an addition of Rs. 1,50,000 by invoking provisions of Section 68 of the Act.

Appeal carried by the assessee against the order of the assessing officer was dismissed by the Commissioner of income tax (Appeals) (in short "the CIT(A)"), vide order dated 15-11-1999. Appeal of the assessee was, however, allowed by the Tribunal vide order dated 2-11-2004 whereby the addition made by the assessing officer and sustained by the CIT(A) was deleted.

We have heard learned counsel for the parties and have perused the record.

Learned counsel for the appellant-Revenue submitted that the Tribunal had erred in reversing the findings of the CIT(A) whereby it had been held that the amount of Rs. 1,50,000 which was received by the assessee by way of an account payees cheque on 28-11-1991 was a genuine transaction.

Controverting the submission of the learned counsel for the Revenue, learned counsel for the assessee submitted that in identical cases of other assessees, namely, Mohan Singh and Parminder Singh, the Tribunal had decided the same issue, vide order dated 26-5-2003 in favour of the assessee and the said order having become final, the findings recorded by the Tribunal in the present case did not warrant interference by this Court. It was pointed out that as per circular of the Board relating to filing of bills u/s 268A of the Act at the relevant time of filing of the appeal, the limit prescribed by Board of Direct Taxes was two lacs whereas the quantum of addition as claimed by the Revenue was Rs. 1.50,000 and taking the tax effect thereon the same would not qualify under the instructions issued by the Board.

We have given our thoughtful consideration to the submissions made by the counsel for the parties.

Learned counsel for the revenue wanted to point out that the decision in the cases of Mohan Singh and Parminder Singh, on which reliance had been placed by the Tribunal holding them to be identical cases, no appeal had been filed challenging the findings recorded therein. The Tribunal, on the basis of material on record, came to the conclusion that the amount of Rs. 1,50,000 which was received by the assessee from Naresh Kapoor had been repaid to him within a period of 15 days and the said transaction was a bona fide transaction and the provisions of section 68A were not attracted. At this stage, it would be advantageous to refer to the findings recorded by the Tribunal which read thus:

After considering the rival submissions and perusing the relevant material on record, it is noted as a factual position that the amount of Rs. 1,50,000 was received by the assessee by way of A/c payee cheque on 28-11-1991 and was repaid within a period of less than 15 days through banking channel. The transaction having been opened and closed through bank draft within the short span of 15 days cannot be held to be in genuine unless any specific material is brought on record, which goes against it. Simply because Shri Naresh Kapoor could not be produced before the AO, cannot lead to the confirmation of addition u/s 68. It is axiomatic that impossible cannot be complied with. Newspaper cuttings duly establish that Shri Naresh Kapoor was absconding and in our considered opinion his physical production before the AO could not have complied with. It is found that the transactions with Shri Naresh Kapoor in identical circumstances became subject matter of adjudication before the Chandigarh Bench in the case of ITO v. Shri Mohan Singh, Ludhiana, in ITA No. 373/Chandi/2000 and Shri Parminder Singh, Ludhiana v. ITO, Ward-II(9), Ludhiana in ITA No. 51/Chandigarh/2000 & 43/Chandi/2000, order dated 26-5-2003 and the Tribunal held the assessees contention in those cases. Respectfully following the precedents, we overturn the impugned order on this score.

In view of the above, the substantial question of law is answered against the revenue and in favour of the assessee.

Since the appeals has been decided on merits, the question of maintainability of appeal in terms of quantum involved u/s 268-A of the Act has been left open. In view of the above, the appeal is dismissed.