Commissioner of Income Tax vs Smt. Premwati

Rakesh Kumar Garg, J.—The revenue has filed the present appeal u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as the ''Act'') against the order dated 27th Sept., 2006 passed by the Tribunal, Delhi Bench "B" in FTA No. 1448/Del/2004 for the assessment year 1997-98 raising the following substantial questions of law:

(i) Whether on the facts and circumstances of the case, the order of Hon''ble Tribunal is perverse in view of the fact that the Hon''ble Tribunal decided the issue on mere presumption without ascertaining the correctness of the plea taken by the assessee regarding availability of funds to the extent of Rs. 4,50,000?.

(ii) Whether on the facts and circumstances of the case, the Hon''ble Tribunal is right in holding that assessment of interest cannot be made until the matter is finally settled by the High Court, in contradiction with the judgment of Hon''ble jurisdictional High Court of Punjab & Haryana following the judgment of apex court in the case of Rama Bai and Others Vs. Commissioner of Income Tax, Andhra Pradesh Hyderabad and Others, whereby interest on enhanced compensation is to be taxed on accrual basis irrespective of the pendency of appeal in higher Courts in respect of enhanced compensation. (IT Appeal No. 176 of 2005 and IT Appeal No. 177 of 2005 in the cases of CIT v. Naresh Kumar and CIT v. DUbagh Singh, respectively).

Assessment proceedings were started on-the basis of an information received by the assessing officer that Shri Rama Nand, husband of Smt. Prem Wati had received huge compensation for acquisition of property amounting to Rs. 83,29,889 (sic) with interest of Rs. 32,30,239. The assessee did not respond to notics. 148 or 142(1) of the Income Tax Act and therefore, the assessing officer completed ex pane assessment of assessee as legal heir of late Sh. Rama Nand on a total income of Rs. 95,92,840 u/s 144 of the Act. Various deposits found in the account of the assessee were treated as unexplained and added in the income of the assessee.

Against the assessment order dated 20-12-2002, the assessee filed an appeal before the Commissioner (Appeals), Panchkula (for short the (sic) raising legal grounds besides challenging addition on facts and circumstances of. the case. The Commissioner (Appeals) allowed the appeal of the assessee partly vide its order dated 2-1-2004.

Still aggrieved against the order of the CFT(A), the assessee further filed an appeal before the Tribunal Delhi, Bench ''B'', Delhi, challenging the additions amounting to Rs. 49,500, Rs. 4,50.000 and a sum of Rs. 4,10,500 as unexplained income of the assessee. The assessee also challenged addition made on account of interest received on the enhanced compensation. The Tribunal vide its order dated 27-9-2006 held that the interest on enhanced compensation received by the assessee was liable to be taxed on accrual basis rather than on receipt basis by following the decision of the Hon''ble Supreme Court in the case of Rama Bai and Others Vs. Commissioner of Income Tax, Andhra Pradesh Hyderabad and Others, . Vide the impugned order, the Tribunal also deleted the addition of an amount of Rs. 49,500 and a sum of Rs. 4,50,000 which were added as unexplained income of the assessee.

Not satisfied with the judgment of the Tribunal, the revenue has filed the present appeal challenging the impugned order of the Tribunal raising the substantial questions of law as mentioned above.

Mr. Yogesh Putney, learned Counsel for the revenue, has very fairly stated that question No. 2 regarding the assessment of interest on the enhanced compensation received by the assessee has been finally determined by a judgment of this court in IT Appeal No. 490 of 2007 decided on 26-3-2008 titled as CIT v. Hardwari Lal (HUF) reported at (2008) 7 DTR (P&H) 76-Ed., and therefore the said question does not survive. Learned Counsel for the revenue assailed the impugned order of the Tribunal on the ground that the issue in dispute has been decided by the Tribunal in favour of the assessee on mere presumptions, as the details of bank account, where the amounts were deposited and out of which Rs. 4,50,000 is claimed to have been withdrawn for deposit of Rs. 4,50,000 on 28-5-1996 were neither furnished by the assessee nor called for by the Tribunal and, therefore, the order of the Tribunal is perverse.

We have heard learned Counsel for the revenue and are unable to accept the contentions raised by him.

A perusal of the impugned order of the Tribunal shows that after appreciating the evidence and other documents on record of the case, the Tribunal has given a pure finding of fact regarding the availability of the funds to the assessee. The relevant part of the order of the Tribunal is reproduced hereunder:

In the second part of the same para, the assessee has challenged addition to the extent of Rs. 4,50,000. It is stated that revenue authorities did not allow even benefit of two drafts mentioned in the sale deed dated 14-5-1996, referred to above. It is claimed that above drafts were deposited by husband of the assessee in some bank account and later on Rs. 4,50,000 were withdrawn and utilized in deposit on 28-5-1996. Having regard to proximity of dates, i.e. 14-5-1996 when sale deed was executed and when amount of Rs. 4,50,000 was received through drafts, and 28-5-1996, (the date on which Rs. 4,50,000 were utilized in the deposit), we are inclined to accept the claim of the assessee that Rs. 4,50,000/- the amount of drafts was available with the assessee as on 28th May, 1996 and, therefore, benefit of above amount in working out unexplained investment has to be allowed to the assessee. We order accordingly.

It may further be seen that the explanation of the assessee with regard to Rs. 49,500 received by him in cash at the time of execution of the sale deed dated 14-5-1996 has been accepted by the department, as the finding of the Tribunal in this regard has not been challenged. However, the other part of the same explanation of the assessee, i.e., the drafts of Rs. 4,50,000 were received by the assessee on 14-5-1996 at the time of execution of the sale deed in addition to a sum of Rs. 49,500 in cash as discussed above and the said drafts were deposited in some bank account and later on the said amount of Rs. 4,50,000 was withdrawn and utilised in deposit on 28-5-1996, has not been accepted by the department without any rhyme or reason. The department has not placed on record any evidence to rebut the contention of the assessee before any of the lower authorities including the Tribunal. The claim of the assessee, i.e., availability of funds of Rs. 4,50,000, has been accepted by the Tribunal after appreciating the evidence on record. Even before this court, Counsel for the revenue has failed to show any perversity in the said findings. Thus, we are not inclined to interfere in the findings of fact recorded by the Tribunal. No substantial question of law arises for the determination of this court in the appeal and the same is hereby dismissed.