Sunder Chhabra vs Dy. Commissioner of Income Tax

Ajay Kumar Mittal, J.—This appeal has been preferred by the Assessee u/s 260A of the Income Tax Act, 1961 (in short ""the Act"") against

the order dated 30-10-2009 passed by the Income Tax Appellate Tribunal, Amritsar Bench, Amritsar (hereinafter referred to as ""the Tribunal"") in

ITA No. 351/Asr/2009 for the assessment year 2006-07 proposing following substantial question of law:

Whether on the facts and circumstances of the case, the learned Tribunal was justified in upholding the addition of Rs. 1,74,140 on account of

unsecured loans even though the creditors have confirmed the same along with bank statement and source being with them?

Put shortly, the facts as narrated in the appeal are that the Assessee filed its return for the assessment year in question on 26-10-2006 showing

an income of Rs. 13,60,026 on which the tax was paid. During the course of assessment, the assessing officer disallowed unsecured loan of Rs.

73,145 obtained from Smt. Rosy wife of the Assessee and Rs. 1,02,745 from Shri Sanjeev Kumar, HUF. The assessing officer made an addition

of Rs. 3,80,364 and assessed the total income at Rs. 17,40,390. Feeling aggrieved, the Assessee took the matter in appeal and the CIT (A) (in

short ""the CIT (A)"") sustained the addition of Rs. 1,74,140 u/s 68 of the Act and partly accepted the appeal vide order dated 12th June, 2009.

On further appeal by the Assessee, the Tribunal partly allowed the appeal on other grounds and had sustained the addition for the loans received

by the Assessee u/s 68 of the Act. Hence, the present appeal by the Assessee:

We have heard learned Counsel for the Appellant.

The Assessee is aggrieved by the addition of Rs. 1,74,140 made by the assessing officer, upheld by the CIT (A) and affirmed by the Tribunal

on account of unexplained cash credit. The assessing officer while making the said addition had recorded as under:

The Assessee has introduced, inter alio, an amount of Rs. 73,145 as new unsecured loan from his wife, Smt. Rosy Chhabra, as under:

Rs. 53,145 on 16th March, 2006

Rs. 20,000 on 17th March, 2006

The copy of bank account of Smt. Rosy Chhabra revealed that these amounts were advanced out of a credit entry of Rs. 73,170 in her bank

account on 13th March, 2006. Further enquiries about the source of Rs. 73,170 revealed that this amount was allegedly received by her from

some commodity transactions through M/s S.P. Scripts Ltd., Ludhiana. The detail of the alleged transactions through M/s S.P. Scripts, Ludhiana

has been noticed as under:

Name of Date of Amount ofDate of Amount ofProfit

the purchase purchase sale sale shown

commodityshown shown shown shown

Crude Oil 3.2.2006 2,74,200 8.3.2006 2,98,000 23,800

TUR 4.2.2006 3,59,000 9.3.2006 3,97,400 38,400

GwarSeed3.2.2006 1,65,800 10.3.20061,76,770 10,970

73,170

4.1 Similarly the Assessee introduced an amount of Rs. 1 lac from Sh. Sanjeev Kumar HUF on 18-3-2006. Shri Sanjeev Kumar is Assessees first

cousin. The copy of bank account of Sh. Sanjeev Kumar HUF revealed that this amount was advanced out of a credit entry of Rs. 1,02,745 in his

bank account on 16th March, 2006. Further enquiries about the source of Rs. 1,02,745 revealed that this amount was alsoallegedly received by

him from some commodity transactions through M/s S.P. Scripts Ltd., Ludhiana. The detail of the alleged transactions through M/s S.P. Scripts,

Ludhiana has been noticed as under:

Name of Date of Amount Date of Amount ofProfit

the purchase of sale sale shown

commodityshown purchase shown shown

shown

Gold 7.2.20067,93,30013.3.20068,16,125 22,825

Ref. Soy 4.2.20063,32,40014.3.20063,61,440 29,040

Oil

Silver 6.2.20067,86,72015.3.20068,37,600 50,880

1,02,745

4.2 The statement of Smt. Rosy Chhabra was recorded in this office andit was stated, inter alia, by her as under:

I do not know the person who is running the brokerage agency.

I do not give any advance to that person.

I do not know about the commission paid to the brokerage agency.

I have seen the relevant copies of papers showing the purchase and sale of commodities and find that there is no entry of commission on these

papers.

The transaction with the brokerage agency was through some common friend of my husband at Ludhiana.

No delivery was taken.

The common friend of my husband was the surety with the brokerage agency.

During the next financial year also, the transaction of commodity future was done and I do not know the name of the brokerage agency. It is

known to the common friend of my husband.

4.3 Sh. Sanjeev Kumar on behalf of his HUF also stated as under:

I do not know the person who is running the brokerage agency.

I do not give any advance to that person.

I do not know about the commission paid to the brokerage agency.

I have seen the relevant copies of paoers showing the purchase and sale of commodities and find that there is no entry of commission on these

papers. The transaction with the brokerage agency was through some common friend at Ludhiana.

No delivery was taken.

The common friend was the surety with the brokerage agency.

During the next financial year also, the transaction of commodity future was done and I do not know the name of the brokerage agency. It is

known to the common friend.

I do not know the profit earned by me in the next year and I do not know whether the profit was advanced to Sh. Sunder Chhabra or some other

person or lying in my own account.

4.4 The state of affairs gets revealed through the statements of Smt. Rosy Chhabra and Sh. Sanjeev Kumar which clearly highlights that the

transactions allegedly entered into by them are not genuine. Both the persons admitted that they did not know about commission paid to the

brokerage agency, that they did not know the person who was running the brokerage agency and that during the next financial year also, the

transaction of commodity future was done and they do not know the name of the brokerage agency. As is well known, every person doing the

brokerage business of such type involving heavy transactions would not take the risk without adequate security amount. Both the persons have also

admitted their ignorance about the commission charged by the broker. It is also interesting to note that the Assessee furnished affidavits from both

the persons suo motu on the last day of the hearing wherein it was found to have been stated that the broker company charged brokerage which

was included in the purchase price. It is thus clear that the purpose of furnishing affidavits by the Assessee is an attempt to fortify his case,

otherwise how it could happen that these persons could not tell about the issue of commission at the time when their statements were recorded. It

can thus be concluded veiy rightly that the amounts allegedly received by the Assessee from these two persons are his own money camouflaged as

received from them through transactions which have been found to be ingenuine. As such amounts of Rs. 73,145 and Rs. 1,00,000 are added to

the income returned by the Assessee u/s 68 of the Act as the Assessees explanation about the nature and source of these amounts has not been

found satisfactory. The interests paid by the Assessee in respect of these amounts worked out/noticed at Rs. 460 and Rs. 535 are also being

disallowed and added to the income returned. Total addition under this para works out at Rs. 1,74,140 (73,145 + 1,00,000 + 460 + 535).

Penalty proceedings u/s 271(1)(c) qua this question of Rs. 1,74,140 are being initiated as I feel satisfied that the Assessee has furnished inaccurate

particulars of his income.

The said finding was affirmed by the CIT (A) and the Tribunal.

Learned Counsel for the Appellant made strenuous efforts in order to reappreciate the evidence to arrive at a conclusion other than the one

concurrently arrived at by the authorities below. He submitted that the finding is perverse and is not based on the material on record. He placed

reliance on the judgment of the Honble Supreme Court in Commissioner of Income Tax (Central), Calcutta Vs. Daulat Ram Rawatmull, and the

judgments of Rajasthan High Court and Gauhati High Court in Gem Palace v. CIT (1987) 168 ITR 543 and Nemi Chand Kothari Vs.

Commissioner of Income Tax and Another, respectively.

We have given our thoughtful consideration to the submissions made by the learned Counsel for the Assessee and do not find any merit in the

same.

The assessing officer, the CIT (A) and the Tribunal have concurrently arrived at the conclusion that two cash credits allegedly advanced by

Rosy Chhabra, wife of the Assessee, amounting to Rs. 73,145 and Sanjit Kumar cousin of the Assessee in respect of Rs. 1,00,000 and the

interest paid by the Assessee thereon of Rs. 460 and Rs. 535 respectively were unexplained cash credits which were added u/s 68 of the Act.

Only effort on the part of the learned Counsel for the Assessee is to reappreciate the material and conclude otherwise. All the authorities have

concurrently on appreciation of material come to the conclusion that the two cash credits were the unexplained money of the Assessee introduced

by him in the business. The authorities have taken a plausible view which does not call for any interference u/s 260A of the Act.

The judgments, referred to above, have no applicability as they were on the individual fact situation of the cases which were before the Courts.

In view of the above, no substantial question of law arises in this appeal.

The appeal is accordingly dismissed.