Prakash Chand Lunia vs Commissioner of Income Tax

Heard learned counsel for the parties on application u/s 256(2) of the Income Tax Act, 1961.

The following questions are proposed :

"1. Whether, on a true and correct interpretation of section 69A of the Income Tax Act, 1961, the Tribunal was right in law in upholding the addition of Rs. 3,06,36,909 as undisclosed investment made by the petitioner ?

Whether, on the facts and circumstances of the case, the Tribunal had any relevant and cogent material before it to hold that the petitioner was the ''owner'' of the silver bars to enable application of section 69A of the Act ?

Whether, on the facts and circumstances of the case the burden had been correctly placed by the Tribunal on the assessee and whether the Tribunal was correct in law in holding that the burden stood discharged leading to the applicability of the provisions of section 69A of the Act ?

Whether the Income Tax Appellate Tribunal was correct in law in upholding the addition of Rs. 3,06,36,909 made by the assessing officer without any independent material or evidence available on record and merely on the basis of information gathered from the order passed by the customs authorities and even without confronting to the assessee the information or material so gathered ?

Whether the order of the customs authorities constituted a valid evidence within the meaning of section 69A read with section 132(4A) of the Income Tax Act, 1961 to come to a conclusion that the assessee was the owner of 146 silver bars ?

Whether the mere possession of 146 silver bars was sufficient material for making an addition u/s 69A of the Income Tax Act, 1961 and for coming to a conclusion that the assessee was the owner thereof particularly when admittedly the presumption regarding ownership u/s 132(4A) of the Income Tax Act, 1961 was not satisfied ?

Whether on the facts and in the circumstances of the case, there was any material available with the ITAT to come to a conclusion that the burden which lay upon the assessing officer u/s 69A of the Income Tax Act, 1961 to prove the ownership, in absence of any independent material or evidence available with him, stood discharged ?

Whether on the facts and circumstances of the case and on the basis of material/evidence available on record, the finding of the Income Tax Appellate Tribunal that the assessee was the owner of 146 silver bars found from the premises A-11 and 12, sector VII, Noida is correct in law and sustainable ?

Whether the Income Tax Appellate Tribunal was correct in law in relying upon the statements of the assessee dated 18-3-1989 and 19-3-1989 for holding that the assessee was the owner of 146 silver bars particularly when the said statements have been later on retracted by the assessee ?

Whether on the basis of material available before it, the Income Tax Appellate Tribunal was legally correct in holding that the statements dated 18-3-1989 and 19-31989 which had not been recorded before any tax authorities had not been given under duress and by torturing the assessee ?

Whether the order of the Appellate Tribunal is not vitiated in law for consideration of irrelevant material and ignoring the relevant material ?

Whether on the facts and in the circumstances of the case, the order of the Tribunal is not vitiated in law in holding the assessee as given a reasonable opportunity to comply with various notices issued by the assessing officer ?

Whether the silver found and seized from premises No. A-11 and 12, sector VII Noida on the basis of material on record could be validly regarded as owned by the assessee within the meaning of section 69A of Income Tax Act ?

Whether on the basis of material on record the Tribunal was correct in law in legally justified to conclude that the plea of statement recorded by the DRI was under duress was proper, correct and valid in law ?

Whether prejudice to the above and in the alternative whether the Tribunal was right in holding that on one hand the assessee was the owner because the assessee was engaged in the silver business and on the other hand holding that the loss of such silver was not a business loss or in the alternative a short-term capital loss ?

Whether prejudice and in the alternative whether the Tribunal had any material before it to in conclude that the confiscation of silver merely amounted to a loss as a result of infraction of law of land and as such was not a business loss of a parallel illegal business ?

Whether on the facts and in the circumstances of the case, the Appellate Tribunal was correct and justified in law in holding that the loss arising as a result of the confiscation could not be allowed to be deducted while computing his income?

Whether the loss arising out of confiscation and held to be or capital loss could not have been allowed as a short-term capital loss ?"

Learned counsel for the department, Mrs. Parinitoo Jain, brought to our notice that on an application of the assessee, the Tribunal has already referred the following questions :

Whether, on the facts and in the circumstances of the case, the Tribunal, after construing and interpreting the provisions contained in section 69A of the Income Tax Act, 1961, was right in law, in holding that the assessee was the owner of 144 silver bars found at premises No. A-11, A-12, Sector VII, Noida and two silver bars found at the premises of Lunia & Co., Delhi in sustaining addition of Rs. 3,06,36,909 being unexplained investment in the hands of the assessee u/s 69A of the Act ?

If the answer to the above question is in the affirmative, then, whether, on the facts and in the circumstances of the case, the Tribunal was right in law in distinguishing the ratio laid down by their Lordships of the Supreme Court in the case of Commissioner of Income Tax, Patiala Vs. Piara Singh, and thereby not allowing the loss on account of confiscation of the silver bars ?

She submits that the questions, which are referred by the Tribunal, cover the entire controversy, i.e., whether the addition of Rs. 3,06,36,909 is justified which had been sustained by the Tribunal and, if it is justified, then, whether as per case of CIT v. Piara Singh (1980) 124 ITR 401, the assessee is entitled for business loss on account of confiscation of silver bars in question.

We agree with Mrs. Jain that both these questions cover almost the entire controversy. The questions proposed in the application u/s 256(2) can at the best be taken as arguments in support of the case of assessee. Thus, no referable questions arise out of the ITR No. 1/2002 on application u/s 256(2) of the Act. However, it will be left open to the assessee to advance these arguments at the time of considering the questions referred in ITR No. 6/96 and those arguments will be considered at the time of answering the questions referred by the Tribunal.

Learned counsel Mr. Ranka further submits that some relevant papers, which were before the Tribunal, are annexed in ITR No. 1/2002. Those papers may also be considered and treated as part of the paper book, while answering the questions, referred in ITR No. 6/96.

The papers, annexed in ITR No. 1/2002, be tagged with the paper book and if they are available before the Tribunal, at the time of hearing, they will be considered when we will hear Reference No. 6/96.

With above directions, the application u/s 256(2) stands rejected.