Punjab-Haryana High Court
Cit vs M.P. Iron Traders on 20 November, 2002
Equivalent citations: [2004]136TAXMAN520(PUNJ, HAR)
ORDER N.K. Sodhi, J.
This appeal by the revenue is directed against the order dated 23-3-1999 passed by the Income Tax Appellate Tribunal., Amritsar Bench whereby the appeals filed by the department and the assessee against the order of the Commissioner (Appeals), Jalandhar (hereinafter referred to as Commissioner (Appeals)) were partly allowed.
2. The relevant assessment year is 1986-87. Assessment for this year was completed under section 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act) which was later re-opened under section 147. The reasons recorded by the assessing officer under sub-section (2) of section 148 of the Act for reopening the assessment are as under :
"16-9-1988 : Information has been reed. from the Income Tax Officer Distt. 1(4), Patiala, vide his office letter No. 13126 dated 26/27-11-1987 that Search and Seizure Operation was conducted on the business as well as residential premises of the firm M/s. Madan Lal Raghubir Chand, Mandi Gobindgarh. My assessee M/s. M.P. Iron Traders, Balachaur, had certain dealings outside the books of account with the Mandi Govindgarh party. The Income Tax Officer, Patiala also has mentioned in his letter the sales made to M/s. M.P. Iron Traders, Balachaur and also payments made by my assessee. On the basis of documents seized pages 45 and 46 in file No.38-Aof the Income Tax Officer, Patiala, it has been mentioned that the sales amounting to Rs. 2,67,542 recorded on this document have not been shown in the regular books of account of M/s. M.P. Iron Trader. He has further mentioned that M/s. Madan Lal Raghubir Chand has received payment of Rs. 3,30,000 as per seized documents. These transactions relate to the assessment years 1986-87 and 1987-88. I have, therefore, reason to believe that by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year 1986-87, income chargeable to tax has escaped assessment."
During the course of reassessment proceedings the assessee was asked to explain as to why it had not entered all the purchases in its books of account made from M/s. Madan Lal Raghubir Chand, Mandi Gobindgarh. The assessing officer was satisfied that the assessee had no explanation and he, therefore, came to the conclusion that goods worth Rs. 2,24,977 had been purchased by the assessee but not mentioned in its books of account and payments, too, had been made which had not been accounted for. A sum of Rs. 7,897 was added back to the taxable income. During the course of re-assessment proceedings the assessing officer also gave notice to the assessee to prove the genuineness of the cash credit entries made in its books of account. Since the assessee could not produce the persons in whose names the cash credit entries were made nor could it produce any other substantial material to show that those entries were genuine, the assessing officer treated the entire amount of cash credit entries as income of the assessee from undisclosed sources and included the same in the taxable income. Feeling aggrieved by the order of the assessing officer, the assessee filed an appeal before Commissioner (Appeals) who held that the assessee was never confronted with the details of the purchases allegedly made by it outside the books of account. He accordingly set aside the additions made by the assessing officer in this regard. As regards the cash credit entries, Commissioner (Appeals) gave partial relief to the assessee and accepted some of the entries as genuine. The appeal was, thus, partly allowed. The department and the assessee both felt aggrieved by the order of Commissioner (Appeals) and preferred appeals before the Income Tax Appellate Tribunal both of which were disposed of by the impugned order. The Tribunal while partly allowing the appeal of the department, remanded the case to the assessing officer to confront the assessee with the material available on the record regarding the purchases made by it from Mandi Gobindgarh which, according to the department, were not recorded in the books of account. The assessing officer has been directed to record a fresh finding in this regard. As regards the appeal of the assessee, the Tribunal placed reliance on a judgment of the Supreme Court in CIT v. Sun Engg. Works (P) Ltd. AIR 1993 SC 43 and held that there was no justification and logic in travelling beyond the issue of which the case was reopened and additions on account of cash credits could not be made in proceedings under section 147 of the Act, This issue had already been settled when the original assessment was made under section 143(1) of the Act. According to the Tribunal, since the proceedings under section 147 of the Act had not been initiated on account of cash credit entries, those could not be treated as income of the assessee while proceeding to make assessment under section 147 of the Act. It is against this finding of the Tribunal that the department has filed the present appeal.
3. We have heard counsel for the parties. There is no gainsaying the fact that the cash credit entries stood entered in the books of account of the assessee when the assessing officer completed the assessment under section 143(1) of the Act without disputing any of those entries. As is clear from the reasons recorded by the assessing officer, proceedings under section 147 of the Act were initiated only because of the information which the assessing officer received from Patiala regarding the purchases made by the assessee which had not been recorded in the books of account. As already noticed, this finding was set aside by Commissioner (Appeals) and in further appeal the Tribunal has remanded the case to the assessing officer who has yet to record a fresh finding. Since the issue regarding the cash credit entries stood concluded when the original assessment was completed under section 143(1) of the Act and no material is shown to have come to the notice of the assessing officer casting doubts as to the genuineness of the cash credits, it could not be reopened in the course of reassessment proceedings initiated on the basis of information received on an another ground. Proceedings under section 147 of the Act are open only qua items of under-assessment or escaped income. The finality of assessment proceedings on other issues remains undisturbed and the assessing officer is not competent to make fishing enquiries on concluded matters. This is precisely what the Supreme Court has decided in Sun Engg. Works (P) Ltd.'s (supra). That view was followed by a Division Bench of this court in Vipan Khanna v. CIT (2002) 255 ITR 220 (Punj & Har). Since the issue stands concluded by a judgment of the Apex Court and also by a Division Bench judgment of this court, we are of the view that no substantial question of law arises for the decision of this court in this case. We are, therefore, unable to entertain the appeal which is accordingly dismissed with no order as to costs.
Appeal dismissed.