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2007 Supreme(P&H) 1301
PUNJAB & HARYANA HIGH COURT
M.M.Kumar and Ajay K.Mittal JJ.
Avinash Gupta
Versus
C.I.T.
Income Tax Appeal No. 586 of 2006,
Decided On : JULY 10, 2007
The Court upheld the connection of the appellant with the undisclosed income based on the operation of bank accounts and the lack of evidence to rebut the findings.
Headnote:
Income-Tax Act 1961 - Undisclosed Income - Section 260-A
Fact of the Case:
The case involved a survey operation at the office premises of the appellant, leading to the discovery of incriminating documents and undisclosed income. The assessment of undisclosed income was completed by the Assessing Officer, and the appellant appealed the decision.
Finding of the Court:
The Court found that the deposits in various bank accounts, including those of the appellant's relatives, were rightly treated as undisclosed income assessable in the hands of the appellant. The Court noted that the accounts were operated by the appellant himself, and no evidence was produced to rebut the findings. The Court also highlighted the unexplained cash found in the appellant's possession and the lack of disclosure regarding the source of deposits.
Issues: The main issue was whether the deposits in the bank accounts, including those of the appellant's relatives, could be considered as undisclosed income of the appellant.
Ratio Decidendi: The Court held that the findings of the lower authorities were based on sufficient evidence and could not be reversed. It emphasized that a true depositor would not ordinarily permit anyone else to operate their account, supporting the connection of the appellant with the deposits.
Final Decision: The appeal was found to lack merit and was accordingly dismissed.
M.M.Kumar, J.
1. This appeal filed under Section 260-A of the Income-Tax Act 1961 (for brevity the Act) is directed against orders dated 7-04-2006 (A1) passed in IT (SS) A No. 19/Chandi/2001 for the block period of 1.4.1987 to 4.2.1998. The assessee has claimed a number of substantial question of law in Para No.7 but at the time of arguments his counsel has pressed only following two questions:
B. Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified on facts and in law confirming the action of the authorities below by erroneously ignoring the fact that under similar facts and circumstances it has deleted the additions on account of FDRs/Bank Accounts of various customers but for the FDRs/Bank Accounts belonging to few relatives merely on the basis of relation and thus is an addition based on surmises and conjectures not warranted under any authorities of law and not even under the principles of natural justice.
G. Whether on the facts and in the circumstances of the case the Income Tax Appellate Tribunal was justified on facts and in law confirming the action of the authorities below by erroneously ignoring the facts, statements, replies and evidences on record which action of the ITAT is perverse and illegal thus needs to be set aside by the interference of this Honble Court for which the appellant prays.
2. A survey operation at the office premises of the appellant Shri Avinash Gupta who was working as Senior Manager, Oriental bank of Commerce, Jamalpur Awana, Ludhiana i.e. (for brevity the Assessee) was undertaken on 4-2-1998. It was converted into search operation under Section 132(1) and continued on 5-2-1998. The department found certain incriminating documents and those were seized. A notice under Section 158 BC of the Act was issued to the assessee for filing of return concerning undisclosed income. The assessee furnished return of his income. The assessment of undisclosed income was completed by the Assessing Officer for the block period at Rs.86,87,513/-vide order dated 23-2-2000 and tax at the rate of 60% was determined as per Section 113 of the Act which was calculated at Rs. 52,07,107/-.
3. On appeal to the Commissioner of Income Tax (Appeal) the assessment order was partially sustained to the extent of Rs. 22,23,036/ only and allowed partial relief to the assessee.
4. The assessee as well as the revenue felt aggrieved by the order passed by the CIT (Appeal) and both of them filed appeal before the Tribunal. The Tribunal examined the question, whether Section 69 or 69 B would be applicable to the facts of the present case. The Tribunal divided the accounts concerning the assessee in two groups. The first group was of those accounts which were in the names of the relatives of the assessee (A/C No. 3603,4298,3681,3850,4606 and 424), the other category of accounts was treated to be benami of the assessee (e.g. A/C No. 4542). The Tribunal approved the reasoning adopted by the CIT (A) in Para Nos. 4 and 5 of its order where the accounts in the names of the relatives of the assessee were dealt with. It is worthwhile to notice Para Nos. 4 and 5 of the order of the Commissioner of Income-Tax (Appeals) which reads as under:
4. In the next part of his order the Assessing Officer has pointed out unexplained investments in saving bank accounts in the names of relatives of the appellant. It is stated that certain bank accounts were opened for encashing FDRs and in such accounts the basic procedure of the bank has been violated by Shri Avinash Gupta. In these accounts though account opening forms are available but the same does not have proper introduction. Such accounts are as under: (i)3603 Satish Singla & Rashmi Singla
(ii)4298 Smt. Rashmi
(iii)3681 Harparkash
(iv)3850 Swaran Lata & Veena Devi
(v)4606 Satish, Vinod, Anju, Purushotami Devi
5. Brief explanation in respect of these accounts as given by the Assessing Officer in the assessment order is also given here.
