KASHMIRI LAL, KASTURI LAL & CO. VS COMMISSIONER OF INCOME-TAX
1991 P T D 250
[Punjab and Haryana High Court (India)]
Before Gakal Chand Mital and S.S. Sodhi, JJ
KASHMIRI LAL, KASTURI LAL & Co.
versus
COMMISSIONER OF INCOME-TAX
Income-tax Reference No. 34 of 1979, decided on 07/11/1988.
Income-tax---
----Reassessment---I.T.O. finding credit entry in books of assessee and accepting same at assessment---Assessment proceedings initiated against creditor-- Confession by creditor that he indulged in hawala business and entry not true-- Reopening of assessment of assessee and cash credit added as income from undisclosed sources---Tribunal finding that I.T.O. had reason to believe. on the basis of subsequent information, that assessee had failed to disclose material facts truly---Tribunal holding reassessment proceedings valid was justified---Indian Income-tax Act, 1961, S. 147(a).
While making the assessment of the assessee for the relevant year, the Income-tax Officer found in the account books of the assessee that a firm, G, had advanced a sum of Rs. 20,000 to the assessee by way of cash credit. At the time of the original assessment, it did not come to light whether G had really given an advance by way of cash credit or was merely a bogus firm lending its name. Later on, when assessment proceedings were initiated against G, it stated that it indulged in hawala business with various parties including the assessee and that the firm merely lent its name to the assessee and no amount was advanced to the assessee. Thereafter, the Income-tax Officer initiated reassessment proceedings under section 147(a) of the Indian income-tax Act, 1961, against the assessee and added the amount of Rs. 20,000 as income of the assessee from undisclosed sources. The order of the Income-tax Officer was upheld by the Tribunal on the ground that the Income-tax Officer had reason to believe, on the basis of subsequent information that the assessee had failed to disclose material facts truly at the time of the original assessment. On a reference:
Held, that the Tribunal was right in holding that action under section 147(a) of the Indian Income-tax Act, 1961 was rightly taken by the Income-tax Officer against the assessee.
Hazi Amir Muhammad Mir Ahmed v. CIT (1977) 110 ITR 630 (P & H) fol.
B.R. Mahajan for the Assessee.
L.K. Sood for the Commissioner.
JUDGMENT
GOKAL CHAND MITAL, J.--The Income-tax Appellate Tribunal, Amritsar Bench, has referred the following question of law for the opinion of this Court:
"Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that action under section 147(a) was rightly taken by the Income-tax Officer against the assessee?"
In order to answer the question, some of the facts found by the Tribunal have to be kept in view. In the account books of the assessee, it was shown that Gurdit Singh Sowraj Singh had advanced Rs. 20,000 to the assessee by way of cash credit. At the time of the original assessment, the fact did not come to fight whether Gurdit Singh Sowraj Singh had really given advance by way of cash credit or was a bogus firm lending its name. Later on, when assessment proceedings were initiated against Gurdit Singh Sowraj Singh in which Sowraj Singh stated that he indulged in hawala business with various parties including the assessee and that the firm merely lent its name to the assessee and no amount was advanced, proceedings for reassessment under section 147(a) of the Income-tax. Act, 1961, were initiated against the assessee. The Income-tax Officer added the amount of Rs. 20,000 as income of the assessee from undisclosed sources in reassessment proceedings and the order was upheld by the Appellate Assistant Commissioner and the Tribunal. The Tribunal followed the decision of this Court in Hazi Amir Mohammad Mir Ahmed v. CIT (1977) 110 ITR 630 in upholding the addition. The Tribunal relied upon the following observations from the decision of this Court (at p. 635):
"It would be a case where the Income-tax Officer has reason to believe, on the basis of subsequent information, that the assessee had failed to disclose material facts truly."
In Hazi Amir's case (1977) 110 ITR 630 (P & H), the facts were quite similar to the present case as there also a lending firm was indulging in hawala business and was merely lending its name without lending money. Since the Tribunal followed the decision of this Court in a parallel case, we answer the question in the affirmative, i.e., in favour of the Revenue and against the assessee, that the Tribunal was right in coming to the conclusion that action under section 147(a) of the Act was rightly taken by the Income-tax Officer. The Revenue will have its costs from the assessee.
Z.S./817/T Order accordingly.