Punjab-Haryana High Court
Commissioner Of Income Tax-I vs Sh. Pusham Bansal on 3 May, 2012
Author: Ajay Kumar Mittal
Bench: Ajay Kumar Mittal, G.S. Sandhawalia
ITA No. 329 of 2005 -1-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
ITA No. 329 of 2005
Date of Decision: 3.5.2012
Commissioner of Income Tax-I, Ludhiana
....Appellant.
Versus
Sh. Pusham Bansal
...Respondent.
CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.
HON'BLE MR. JUSTICE G.S. SANDHAWALIA.
PRESENT: Mr. Rajesh Katoch, Advocate for the appellant.
None for the respondent.
AJAY KUMAR MITTAL, J.
1. This order shall dispose of ITA Nos. 329 and 330 of 2005 as according to the learned counsel for the appellant, the identical questions of law and facts are involved therein. For brevity, the facts are being extracted from ITA No. 329 of 2005.
2. ITA No. 329 of 2005 has been filed by the revenue under Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 16.8.2004 passed by the Income Tax Appellate Tribunal, Delhi Bench 'A', New Delhi (hereinafter referred to as "the Tribunal") for the block assessment period 1.4.1985 to 21.7.1995.
3. The appeal was admitted by this Court vide order dated 22.8.2006 for determination of the following substantial questions of ITA No. 329 of 2005 -2- law:-
"i) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in deleting the addition of Rs.1,37,49,079/-
as unexplained investment in lottery tickets u/s 69 of I.T. Act, 1961?
ii) Whether on the facts and circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in deleting the incentive income of Rs.52,38,859/- as being received by other stockiest of lottery tickets?"
4. Briefly stated, the facts necessary for adjudication of the present appeal are that the assessee who is an individual filed his return of income on 12.7.1996 for the block assessment period from 1.4.1985 to 21.7.1995 disclosing undisclosed income at Rs.2,18,000/- in response to the notice under Section 158BC of the Act. After the approval of the Commissioner of Income Tax, Delhi-VIII, the assessment was completed on 31.7.1996 determining the undisclosed income at Rs.2,01,40,979/-. Firstly, the undisclosed income was worked out at Rs.52,38,859/- for the block period on account of incentive income by applying the rate of 1% on the total turnover and secondly the undisclosed income on account of unaccounted investment in lottery business was worked out at Rs.1,37,49,079/- by invoking the provisions of Section 69 of the Act. Feeling aggrieved, the assessee filed an appeal before the Tribunal. The Tribunal vide order dated 16.8.2004 allowed the appeal and deleted both the undisclosed ITA No. 329 of 2005 -3- incomes of Rs.52,38,895/- and Rs.1,37,49,079/-. Hence, the present appeal by the revenue.
5. We have heard learned counsel for the revenue and have perused the record.
6. The issues that arise for adjudication in this appeal are:-
(i) Rs.1,37,49,079/- is unexplained investment in lottery ticket under Section 69 of the Act?
(ii) Incentive income of Rs.52,38,859/- as being received by other stockiest of lottery tickets?
7. Taking up issue No. (i), it may be noticed that the Tribunal had relied upon the findings in the report of auditors which was found to be in accordance with the provisions of the Act. It was further observed that during the course of search, no material was found indicating any payment in cash outside the books of account regarding the purchase of lottery tickets. The Tribunal while deleting the addition on this count, in para 15 has recorded as under:-
"15. The case of assessee is that in similar manner, the PWT received from his customers are returned to the main person from whom such tickets were purchased in lieu of purchase price. Only the net amount is paid either by cheque/draft or by cash which is fully recorded in the books. The above audit report, in clear terms, states that Prize winning ticket (PWT) are returned in lieu of payment and the account is settled on weekly basis. This finding of the auditors has not been rebutted by the AO by any ITA No. 329 of 2005 -4- material or evidence. The finding of AO that assessee must have paid the purchase price of tickets in cash is merely based on surmises and conjectures. Account books of assessee have been found to be correct by the auditors as mentioned in para 38 of the report. In the course of search, no material was found indicating any payment in cash outside the books of account regarding purchase of lottery tickets. Wherever the auditors found investment in assets outside the books of account, the same had been listed separately with which we are not concerned in these appeals. The finding of special auditors that PWT were returned in lieu of payment remains unrebutted. Hence, the finding of AO that assessee made unaccounted investment in purchase of tickets is vacated. Consequently, the addition of Rs.1,37,49,079/- in the case of Pusham Bansal and of Rs.15,14,88,845/- in the case of Vijay Kumar Bansal are hereby deleted."
8. In light of the aforesaid findings, in which no fault could be pointed out by learned counsel for the revenue with reference to any material, the observations made by the Tribunal while deleting the aforesaid addition on account of purchase of lottery tickets cannot be faulted.
9. Adverting to issue No. (ii), it would be apposite to refer to the findings recorded by the Tribunal. The Tribunal had observed that ITA No. 329 of 2005 -5- the authorized officer had relied upon the instance of I.C. Khurana and on that basis made the addition whereas there was no material found during the course of search which could indicate that there was undisclosed income of the assessee in the form of incentives on any turn over which might have been received by him. The relevant findings in paras 12 and 13 of the impugned order read thus:-
"12. Rival submissions have been considered carefully in the light of materials placed before us. It is the settled legal position in view of decisions of various benches of the Tribunal and High Courts that assessment of undisclosed income under Chapter XIV-B has to be made on the basis of incriminating material found in the course of search. If there is no material found as a result of search indicating undisclosed income, then no additions can be made on inferences/presumptions or assumptions. Reference can be made to Sunder Agencies, 63 ITD 245 and Parkh Foods Ltd. 64 ITD 396.
13. In view of the above legal position, let us deal with the additions made by AO in the light of facts on record. There is no material on record to establish that assessee was either the organizer or stockiest of any lottery. Further, there is nothing on record to indicate that assessee had any dealing with I.C. Khurana. In the absence of such material, it is not understandable as to how the AO could infer that ITA No. 329 of 2005 -6- assessee earned incentives @ 1% of total turnover. AO has also not brought any material to suggest that assessee ever received any incentive from the persons with whom assessee had any dealings. Hence, no addition could be made on the basis of assumptions/suspicion or surmises. Accordingly, the orders of AO are set aside on this issue in both the cases and consequently, the addition of Rs.52,38,859/- in the case of Pusham Bansal and of Rs.6,23,09,547/- in the case of Vijay Kumar Bansal are hereby deleted."
10. The said finding has not been shown to be perverse or illegal in any manner. Further, the addition made by the Assessing Officer has been held to be on the basis of assumptions/suspicion or surmises. Thus, the addition has rightly been deleted.
11. In view of the above, the questions of law are answered against the revenue and in favour of the assessee. The appeals are accordingly dismissed.
(AJAY KUMAR MITTAL)
JUDGE
May 3, 2012 (G.S. SANDHAWALIA)
gbs JUDGE
ITA No. 329 of 2005 -7-
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA No. 330 of 2005 Date of Decision: 3.5.2012 Commissioner of Income Tax-I, Ludhiana ....Appellant.
Versus Sh. Vijay Bansal ...Respondent.
CORAM:- HON'BLE MR. JUSTICE AJAY KUMAR MITTAL.
HON'BLE MR. JUSTICE G.S. SANDHAWALIA.
PRESENT: Mr. Rajesh Katoch, Advocate for the appellant.
None for the respondent.
AJAY KUMAR MITTAL, J.
For orders, see ITA No. 329 of 2005 (Commissioner of Income Tax-I, Ludhiana v. Sh. Pusham Bansal).
(AJAY KUMAR MITTAL)
JUDGE
May 3, 2012 (G.S. SANDHAWALIA)
gbs JUDGE