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Raghbir Singh Vs. Commissioner of Income-tax and ors. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtPunjab and Haryana High Court
Decided On
Case NumberCivil Writ Petition No. 2213 of 1977
Judge
Reported in[1985]154ITR255(P& H)
ActsIncome Tax Act, 1961 - Sections 271(1) and 274
AppellantRaghbir Singh
RespondentCommissioner of Income-tax and ors.
Appellant Advocate D.S. Nehra, Adv.
Respondent Advocate Ashok Bhan and; Ajay Mittal, Advs.
Excerpt:
.....the affidavit'.it does not mean that any elaborate enquiry was required to be made into the affidavit or its contents, a matter purely discretionary with the appellate tribunal......sum included a sum rs. 10,000 which the petitioner was found to have loaned to m/s. vasu-dhara textile mills, ludhiana, but without having disclosed the source of that sum of money. the petitioner appealed against the order of the ito. the aac, vide order dated august 24, 1974, deleted the addition except the amount of rs. 10,000 which related to m/s. vasudhara textile mills, ludhiana. the quantum case thus rested at that stage. the law, as it then stood, required the ito to report the matter, for purposes ofimposition of penalty, to the iac, in case the penalty was leviable under section 271(1)(c) of the act and related to concealed income (as determined by the ito on assessment) exceeding a sum of rs. 25,000. as is plain, the ito had made an addition of rs. 37,465 and thus his.....
Judgment:

Madan Mohan Punchhi, J.

1. This is a petition under Articles 226 and 227 of the Constitution of India by an income-tax assessee who is aggrieved against the orders of the income-tax authorities, whereby penalty was levied on him. Instead of bringing the matter under Section 256 of the I.T. Act, 1961 (hereinafter referred to as the Act), by way of reference to this court, he has taken recourse to challenge the orders in writ jurisdiction without any explanation why such course was adopted and the alternate remedy not availed of. On this short ground, the petitioner could have been non-suited. But, since the petition in 1977 was admitted ex parte, it would not be proper now to dismiss it on that score despite the objection of the respondents.

2. The facts giving rise to this petition are simple and straight. The petitioner was a businessman at Ludhiana under the name and style of 'Messrs. Raghbir Singh Vinod Kumar, Ghas Mandi, Ludhiana'. For the assessment year 1971-72, he filed his income-tax return. The ITO made additions to the tune of Rs. 37,465. The said sum included a sum Rs. 10,000 which the petitioner was found to have loaned to M/s. Vasu-dhara Textile Mills, Ludhiana, but without having disclosed the source of that sum of money. The petitioner appealed against the order of the ITO. The AAC, vide order dated August 24, 1974, deleted the addition except the amount of Rs. 10,000 which related to M/s. Vasudhara Textile Mills, Ludhiana. The quantum case thus rested at that stage. The law, as it then stood, required the ITO to report the matter, for purposes ofimposition of penalty, to the IAC, in case the penalty was leviable under Section 271(1)(c) of the Act and related to concealed income (as determined by the ITO on assessment) exceeding a sum of Rs. 25,000. As is plain, the ITO had made an addition of Rs. 37,465 and thus his action fell squarely within Section 274(2) of the Act, as it then stood. The IAC then initiated proceedings and imposed a penalty of Rs. 10,000 under Section 271(1)(c) of the Act by his order dated March 19, 1976, annex. P-2.

3. The petitioner filed an appeal before the Income-tax Appellate Tribunal and statedly filed an affidavit before it in support thereof, in which it was revealed that M/s. Vasudhara Textile Mills had made a voluntary disclosure owning the said sum of Rs. 10,000 to be theirs and the petitioner's name was only used for the purpose. This was quite opposite to the stance taken by the petitioner before the ITO. There he had pleaded that he was in money-lending business and his transactions were of two types, i.e., those which related to name-lending and those which related to actual lending. Regarding the aforesaid sum of Rs. 10,000, the petitioner had claimed it to be a case of actual lending. Surprisingly, in his account books, he even made an entry in that regard on April 25, 1970, and so did M/s. Vasudhara Textile Mills indicating the taking of loan. Furthermore, as was the finding recorded by the authorities, the said sum was shown to have been returned to the petitioner on June 30, 1970, within a span of nearly two months. Still the petitioner claims that he persisted before the Income-tax Appellate Tribunal that when M/s. Vasudhara Textile Mills had claimed this money to be theirs and, in other words, benami of the petitioner, then on that score the Tribunal should have held the said sum to be benami in his hands and of name-lending not obligating him to disclose the source of income of that sum. The Tribunal, vide its order annex. P-1, however, did not find favour with the contention raised and rejected the same, holding that it did not make the slightest difference if Messrs. Vasudhara Textile Mills had made a voluntary disclosure of that kind.

4. The aggrieved petitioner has approached this court to challenge the aforesaid orders. Return has been filed and the matter has been explained on the affidavit of the ITO.

5. Mr. D.S. Nehra, learned counsel for the petitioner, has raised three points which may be dealt with seriatim. The first point is that the case of the petitioner did not fall within the ambit of Section 274(2) of the Act inasmuch as the concealed income was determined at Rs. 10,000 and thus the IAC had no pecuniary jurisdiction to initiate penalty proceedings against the petitioner. There is an obvious fallacy in the argument, for, Sub-section (2) ofs. 274 of the Act correlates the fault as found by the ITO and the jurisdiction of the IAC. It states in so many words that if, in a case falling under Section 271(1)(c) of the Act, the amount of income (as determined by the ITO on assessment) in respect of which particulars have been furnished, exceeds a sum of Rs. 25,000, the ITO shall refer the case to the IAC who shall, for the purpose, have all the powers conferred under this Chapter for the imposition of penalty. In other words, the primary power for initiating the penalty proceedings is with the ITO, but, if the income concealed is beyond Rs. 25,000, the matter has to be referred by the ITO to the IAC. There are no two opinions that such an order of the ITO is not appealable by the Revenue before the AAC. Obviously, the foundational order is that of the ITO. It is the axis thus on which the jurisdiction of the I AC revolves. By no means can the order of the AAC passed on appeal of the assessee be supplanted in the aforesaid provision so as to oust the jurisdiction of the IAC if, per chance, the appellate court has decreased the quantum of additions. Thus, there is no merit in the first point.

6. The second contention raised is that the matter has not been approached from a proper angle. There is, allegedly, violation of the rule laid down by the Supreme Court in CJT v. Anwar Ali : [1970]76ITR696(SC) . Reliance is also placed on Addl. CIT v. Karnail Singh and Gumani Ram Siri Ram v. CIT . The contention raised is also not of much substance. A Full Bench of this court in Vishwakarma Industries v. CIT , has overruled Karnail Singh's case . A clear distinction has been brought about in the position in law after the amendment to Section 271(1)(c) of the Act, whereto an Explanation was added in the year 1964. In the instant case, the concealed income was more than 80 per cent, and the onus of proof was rightly placed on the assessee in accordance with the Explanation. This contention too is rejected.

7. The third and the last point raised is that the Appellate Tribunal decided the appeal without looking to the affidavit filed by the petitioner. The ITO has tried to explain away in his return that even as per that affidavit if M/s. Vasudhara Textile Mills had made some voluntary disclosure, that did not make any difference with regard to the liability of the petitioner to the concealment admittedly made by the petitioner. It is maintained by the petitioner's learned counsel that the contents of the affidavit had to be verified by the Appellate Tribunal by checking from M/s. Vasudhara Textile Mills as to whether such disclosure was made or not. The argument again, as it seems to me, loses sight of the fact that the petitioner had himself owned that the transaction of Rs. 10,000, which he entered into with M/s. Vasudhara Textile Mills, was genuine and of moneylending. The morn fact that M/s. Vasudhara Textile Mills, by a voluntary disclosure described such transaction as benami, so far as it related to the petitioner, was of no avail to the petitioner. No order of any income-tax authority, passed thereon was pressed into service to show any conflicting decision. The voluntary disclosure of M/s. Vasndhara Textile Mills could not, in the circumstances, be treated as the gospel truth. In any case, it was a pure question of inference to be drawn from the circumstances which, was within the domain of the authorities. No fault in that regard can be found with the view taken by the Appellate Tribunal. Mr. Nehra was emphatic that the affidavit had to be looked into and then alone the Tribunal could come to a conclusion. However, he has not been able to elaborate as to what precisely is his view about 'looking into the affidavit'. It does not mean that any elaborate enquiry was required to be made into the affidavit or its contents, a matter purely discretionary with the Appellate Tribunal.

8. For the foregoing reasons, there is no merit in this petition which fails and is hereby dismissed. Under the circumstances, however, there will be no order as to costs.


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