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Commissioner of Income-tax Vs. National Rice and General Mills - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberIncome-tax Case No. 24 of 1975
Judge
Reported in[1979]120ITR39(P& H)
ActsIncome Tax Act, 1961 - Sections 147 and 256(2)
AppellantCommissioner of Income-tax
RespondentNational Rice and General Mills
Appellant Advocate D.N. Awasthy and; B.K. Jhingan, Advs.
Respondent Advocate H.L. Sibal and; S.C. Sibal, Advs.
Excerpt:
.....sections 80 (2) & 89 & punjab motor vehicles rules, 1989, rules 85 & 80: [t.s. thakur, cj, jasbir singh & surya kant, jj] appeal against orders of state or regional transport authority imitation held, a stipulation regarding the period of limitation available for invoking the remedy shall have to be strictly construed. that is because any provision by way of limitation is in the nature of a restraint on the remedy provided under the act. so viewed two inferences are clear viz., (1) sections 80 and 89 of the act read with rule 85 of the rules make it obligatory for the authorities making the order to communicate it to the applicant concerned and (2) the period of limitation for any appeal against the order is reckonable from the date of such communication of the reasons would imply..........year 1965-66, the ito found cash credits to the tune of rs. 27,000 in the name of messrs. gurdit singh swaraj singh. after due investigation, the ito accepted this amount as genuine cash credit and the assessment was completed on the 24th of june, 1967, on a total income of rs. 62,628. later on, sh. swaraj singh, proprietor of messrs. gurdit singh swaraj singh, gave a statement on 18th august, 1969, before some other ito that he was doing hawala business and that the credits appearing in the name of messrs. gurdit singh swaraj singh were bogus. thereupon, the ito reopened the assessment in the present case under section 147(a) of the i.t. act, 1961 (hereinafter called 'the act'), and called upon the assessee to produce further evidence in support of the genuineness of the cash credit.....
Judgment:

B.S. Dhillon, J.

1. In the course of the original assessment of the assessee for the assessment year 1965-66, the ITO found cash credits to the tune of Rs. 27,000 in the name of Messrs. Gurdit Singh Swaraj Singh. After due investigation, the ITO accepted this amount as genuine cash credit and the assessment was completed on the 24th of June, 1967, on a total income of Rs. 62,628. Later on, Sh. Swaraj Singh, proprietor of Messrs. Gurdit Singh Swaraj Singh, gave a statement on 18th August, 1969, before some other ITO that he was doing hawala business and that the credits appearing in the name of Messrs. Gurdit Singh Swaraj Singh were bogus. Thereupon, the ITO reopened the assessment in the present case under Section 147(a) of the I.T. Act, 1961 (hereinafter called 'the Act'), and called upon the assessee to produce further evidence in support of the genuineness of the cash credit in question. On the failure of the assessee to produce any further evidence, the ITO added the sum of Rs. 27,000 to its income as income from undisclosed sources. This addition was also upheld by the AAC in appeal.

2. The Tribunal, while accepting the appeal of the assessee, observed as under :

' Now, the present case is not a case, where the assessee had not at all disclosed anything about the cash credits in question in the original proceedings. Nor is it a case where the assessee had merely referred to his account books and the ITO omitted to examine the same for some reasons, justifying the applicability of Explanation 2 to section 147(a). This is a case where the assessee positively produced evidence to substantiate its version. Apart from producing its own account books, the assessee produced the account books of the party concerned, i.e., M/s. Gurdit Singh Swaraj Singh, containing corresponding entries relating to the loans in question. Again, the assessee produced the representative of Messrs. Gurdit Singh Swaraj Singh who not only admitted the genuineness of the loans in a clear and unambiguous manner, but also positively stated that the party concerned had sufficient cash balances at its disposal on April 29, 1964, and June 24, 1964, when the amounts of Rs. 12,000 and Rs. 15,000 were advanced by them to the assessee. This is not all. The assessee even went to the length of telling the ITO in no uncertain terms, vide its letter dated June 13, 1967, that the creditor concerned was a regular income-tax and wealth-tax assessee. Obviously, the ITO was impressed by the evidence produced by the assessee and it was only after satisfying himself completely that he accepted the genuineness of the cash credits in question. In these circumstances, we are of the opinion that the assessee disclosed fully and truly all material facts necessary for its assessment and when that was done, the ITO was not justified to change his opinion on the basis of some uncorroborated evidence that came to his notice later on. '

3. In the subsequent part of the order, the Tribunal found as follows :

' In the present case there is absolutely no material on record to prove that the loans in question were really fictitious. The department merely relies upon the statement dated August 18, 1969, of Shri Swaraj Singh. But this statement cannot be accepted because the same was never recorded in the presence of the assessee. Since the assessee did not get a chance to cross-examine Shri Swaraj Singh, the statement recorded at its back cannot be used against it. The principles of natural justice having not been followed, the loans in question cannot be considered to be fictitious simply on the basis of the uncorroborated statement of Shri Swaraj Singh. We, therefore, reject the contention of the learned representative of the department.'

4. After having recorded the above findings, the Tribunal held that the ITO erred in adding Rs. 27,000 to the income of the assessee as income from undisclosed sources and thus deleted the amount of Rs. 27,000.

5. The revenue has approached this court with a prayer for directing the Tribunal to refer the following proposed questions of law, which the Tribunal refused to refer for the opinion of this court '

' (i) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessment was not validly reopened under section 147(a) of the Income-tax Act

(ii) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the ITO had erred in adding the income of Rs. 27,000 in the income of the assessee as income from undisclosed sources ?'

6. After hearing the learned counsel for the parties, we are of the opinion that, in view of the finding recorded by the Tribunal, no question of law arises in this case. The question whether there is sufficient material on the record to come to the conclusion that the cash credit entry of Rs. 27,000 in the name of Messrs. Gurjit Singh Swaraj Singh was genuine or not is essentially a question of fact and the Tribunal rightly came to the conclusion that there was no material on the record to prove that the loans in question were really fictitious. The relevant findings of the Tribunal which have been reproduced in the earlier part of the judgment are self-explanatory. Mr. Awasthy, the learned counsel for the revenue, could not point out any material on the record to show that the Tribunal misdirected itself in recording the above findings. As observed earlier, the findings recorded by the Tribunal are findings of fact and it thus cannot be successfully contended that the questions mentioned in the petitions are questions of law. Mr. Awasthy, the learned counsel for the revenue, relies on a Division Bench decision of this court in Hazi Amir Mohd. Mir Ahmed v. CIT [1911] 110 ITR 630. This decision is not of any help to the learned counsel for the revenue. That was a decision on the facts of that case.

7. For the reasons recorded above, there is no merit in this petition and the same is hereby dismissed. However, there will be no order as to costs.


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