COMMISSIONER OF INCOME TAX Vs. PURAN CHAND MITTAL

JUDGEMENT

(1.) This appeal under section 260A of the Income-tax Act, 1961 (for short "the Act"), has been filed by the Revenue against the order dated March 30, 2006, passed by the Income-tax Appellate Tribunal, Chandigarh Bench "B", Chandigarh (in short "the Tribunal") in I.T.A. No. 21/Chandi/2004, relating to the assessment year 1993-94. The appeal was admitted for determination of the following substantial questions of law :

(2.) The facts, in brief, necessary for adjudication as narrated in the appeal, are that on October 23, 2000, the assessee filed his return for the assessment year 1993-94 declaring income of Rs. 34,150. He had declared the income from salary and interest which he got in the capacity of a partner of M/s. Piare Lal and Sons, Patiala. Besides, the assessee also showed income of Rs. 15,600 from the commission earned by selling and purchasing the properties. During the assessment proceedings, it was found that the assessee had also shown an amount of Rs. 3,25,000 as liability towards one Ajit Singh in the balance-sheet as on March 31, 1993. This amount was stated to be an advance consideration received from him on account of sale of a commercial plot No. 107 situated in Chhoti Baradari, Patiala. By means of producing a copy of the agreement to sell, the assessee showed that as per the terms thereof, the sale price of the plot was determined at Rs. 6,50,000 and the purchaser had paid the amount of Rs. 3,25,000 in advance. It was further stipulated in the agreement that the transfer of plot was to be made by December 31, 1995. During the proceedings, the assessee changed his stand and gave different version.

(3.) The pleas raised and the answers furnished to the questionnaire put by the Income-tax Department did not prevail upon the authorities and ultimately, the Assessing Officer, vide order dated March 27, 2002, made addition of Rs. 3,25,000 on account of unexplained entry showing liability towards Shri Ajit Singh and another sum of Rs. 1 lakh on the ground that the assessee had made payment to Sh. Megh Chand Sharma which was not entered in the books of account. The assessee, however, succeeded in appeal before the Commissioner of Income-tax (Appeals) (in short "the CIT(A)"). The appellate authority, vide order dated October 29, 2003, deleted the addition, holding that the amount of Rs. 3,25,000 was a trading advance against the intended sale of plot and it was not the assessee's own money. The Commissioner of Income-tax (Appeals) also deleted the addition of Rs. 1 lakh made on account of payment to Megh Chand Sharma, In further appeal, at the instance of the Revenue, the order of the Commissioner of Income-tax (Appeals) was upheld by the Tribunal, vide the order under appeal and this is how the Revenue has come up in appeal before this court.