Ghanshyamdas Goyal vs Commissioner of Income Tax

This is an appeal u/s 260A of the IT Act, 1961 (hereinafter referred to as "the Act" for short) and pertains to asst. yr. 2003-04.

The assessee deals in "Hundi Dalali" at Neemuch. A survey was conducted u/s 133A at the business premises of the assessee on 18th Feb., 2003. The assessee filed a return of income showing an income of Rs. 11,81,200 on 25th Nov., 2003 and it was selected for scrutiny. At the time of survey, assessee surrendered additional income of Rs. 31,70,000 under the following four heads :

(1)

Unexplained investment in house

4,00,000

(2)

Excess cash found

8,00,000

(3)

Unexplained investment in ornaments

3,00,000

(4)

Unexplained investment Hundi business

16,70,000

Total

31,70,000

Against the additional income of Rs. 31,70,000 surrendered at the time of survey, assessee had shown total income of Rs. 11,81,205. The main reason for the income show less than the income surrendered stated to be due to loss of Rs. 12,87,205 in the garlic account and donation of Rs. 7,00,000 for which deduction u/s 35AC was claimed. The assessing officer found that the assessee had never done the garlic business in the earlier year. In the year previous to the assessment year, garlic business was shown only to reduce the income surrendered during the course of survey u/s 133A of the Act. The assessing officer also found that garlic was purchased at higher rate than the market rate of this quality of garlic. Considering all these facts, the loss claimed in garlic account by the assessee of Rs. 12,87,205 was disallowed by the AO. The claim for deduction u/s 35AC in respect of Rs. 7,00,000 was also disallowed. However, that is not under challenge.

Being aggrieved by the order passed by the AO, assessee preferred an appeal to CIT(A), who allowed the deletion of Rs. 12,87,205 as claimed by the assessee. Against the order passed by the CIT(A), the Revenue filed an appeal before the Tribunal, Indore Bench. Indore. Learned Tribunal by the order impugned allowed the appeal of Revenue and set aside the deletion of Rs. 12,87,205. Hence, this appeal u/s 260A of the Act by the assessee.

In the memo of appeal, learned counsel for the appellant has proposed two substantial questions of law, but at the time of argument, he gave up proposed question No. 2 and confined himself to proposed question No. 1 and submitted that all the transactions of sales and purchase of garlic were through banking channels with the registered dealers which were duly supported by vouchers, therefore, the genuineness of the transaction could not be doubted. It was submitted by Shri Goyal, learned counsel appearing for the appellant, that the assessee suffered a loss due to change in market trend.

After hearing Shri Goyal at length and going through the material available on record, we find that the Tribunal has recorded a pure finding of fact based on material available on record of the assessing officer and it was held by the Tribunal as under :

We are further of the opinion that if the facts of the issue before us are analyzed as a whole, then as against the documentary evidences produced by the assessee, his conduct and the circumstances speak volume against.

It is undisputed that the alleged sales of garlic were effected immediately after the survey was carried out and sales thereof took place in the latter half of the March, 2003 only when the trend of prices was against the assessee. Undisputedly, the assessee was not in the garlic business and the proximity of purchases with the date of survey makes whole thing very suspicious as has been rightly observed by the Tribunal and in our considered opinion, no question of law much less substantial question of law is involved in this appeal. We find no merit and substance in the appeal.

In view of the foregoing, appeal fails and,is hereby dismissed summarily.