Karnataka High Court
Gopal S. Pandit vs The Commissioner Of on 28 June, 2018
Bench: Vineet Kothari, S.Sujatha
1/13
IN THE HIGH COURT OF KARNATAKA, BENGALURU
DATED THIS THE 28TH DAY OF JUNE 2018
PRESENT
THE HON'BLE DR.JUSTICE VINEET KOTHARI
AND
THE HON'BLE MRS.JUSTICE S.SUJATHA
I.T.A. No.37/2017
BETWEEN :
GOPAL S. PANDIT
PROP: PANDIT DEVELOPERS
"EMPORIUM", COMMERCIAL COMPLEX
III FLOOR, OLD PUMP WELL ROAD
KANAKANADY
MANGALORE-575002. ...APPELLANT
(BY SRI R.CHANDRASHEKAR, ADV.)
AND :
1. THE COMMISSIONER OF INCOME TAX
C.R. BUILDING
MANGALORE-575001.
2. THE DEPUTY COMMISSIONER OF INCOME TAX
CENTRAL CIRCLE
MANGALORE-575001. ...RESPONDENTS
(BY SRI JEEVAN J. NEERALGI, ADV.)
THIS INCOME TAX APPEAL UNDER SECTION 260-A OF
INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED
27.07.2016 PASSED IN ITA NO.1188/BANG/2013, FOR THE
ASSESSMENT YEAR 2007-08, PRAYING TO (1) FORMULATE THE
SUBSTANTIAL QUESTIONS OF LAW STATED ABOVE, [2] ALLOW
THE APPEAL OF THE APPELLANT MODIFYING THE ORDER OF
THE INCOME TAX APPELLATE TRIBUNAL DATED 27.07.2016 IN
Date of Judgment 28-06-2018, I.T.A. No.37/2017
Gopal S. Pandit Vs.
The Commissioner of Income Tax & Another
2/13
ITA No.1188/BANG/2013 AND DIRECT TO THE SECOND
RESPONDENT TO PASS APPROPRIATE ORDER IN ACCORDANCE
WITH LAW AND ETC.
THIS APPEAL COMING ON FOR ADMISSION, THIS DAY,
Dr. VINEET KOTHARI, J., DELIVERED THE FOLLOWING:
JUDGMENT
Mr. R.Chandrashekar, Adv. for Appellant - Assessee. Mr. Jeevan J. Neeralgi, Adv. for Respondents-Revenue.
In the present Appeal filed by the Assessee against the Order of the learned Income Tax Appellate Tribunal, Annexure-A dated 27.07.2016, the following two purported substantial questions of law have been suggested by the Assessee.
I. Whether, on the facts and in the
circumstances of the case, Appellate
Tribunal was correct in holding that.Joint Commissioner while granting an approval u/s.153D of the Act, to an order passed u/s.153A of the Act, no opportunity need to be provided to the Appellant?
II. Whether, on the facts and circumstances of the appellant's case, the Appellate Tribunal is right in holding the seized material Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 3/13 corroborates the income fixed under the head "Pooja", though seized material does not disclose such income from "Pooja"? III. Whether, the Appellate Tribunal is right in its conclusion that the noting in the dairy represents payment in lakhs and the sum of Rs.19 lakhs is an unexplained expenditure assessable in the year 2007- 08?
2. As far as these issues are concerned, we have already dismissed the connected Appeal of the Assessee, namely, I.T.A. No.36/2017 in the case of 'Gopal. V. Pandit v. The Commissioner of Income Tax & Another' in which as regards first question, we have held that in the absence of specific provision in Section 153D of the Income Tax Act, 1961, ['Act' for short] the present Authority, namely, Joint Commissioner is not expected to give an opportunity of hearing to the Assessee before giving an approval to the Draft Assessment Order to be passed by the lower Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 4/13 Authority, namely, Deputy Commissioner. The relevant portion is quoted below for ready reference.
"8. Having heard the learned Counsel for the parties, we are satisfied that the internal guidelines issued by the Central Board of Direct Taxes, as urged by the learned Counsel for the Assessee, bereft of the statutory provisions in Section 153D of the Act cannot bind the approving Authority, namely, the Joint Commissioner to comply with the principles of natural justice by the said Authority. The Assessing Authority undoubtedly has of course given adequate and reasonable opportunity of hearing to the Assessee and all objections on merits were considered by him. Merely because, Section 153D of the Act requires a prior approval of the Draft Assessment Order by the higher Authority, namely, the Joint Commissioner in the present case, because the Assessment Order was passed by the Authority below the rank of the Joint Commissioner, the provisions of the Act do not mandate that a fresh round of opportunity of hearing should Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 5/13 be given to the Assessee by such Authority, namely, Joint Commissioner also even for approving Draft Assessment Order. It is not a case where the Assessee did not have any opportunity of hearing before any of the Authorities to defend his case and some assessment of tax has been made against him fastening the liability of tax against the Assessee. The Assessing Authority as well as the two Appellate Authorities who have concurrent powers of assessment as are available with the Assessing Authority, have admittedly heard the Assessee on the merits of the case. Therefore, we are of the opinion that no substantial question of law in this regard can be said to be arising on the basis of the office guidelines which are for internal purposes of the Department. They are not even statutory instructions issued u/s. 119 of the Act, which if beneficial to Assessee have been held to be binding on the Authorities of the Department. The Assessee has also not been able to point out any prejudice caused to him on account of approving Authority not giving him an opportunity of hearing."
Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 6/13
3. Even as far as second question raised before us is concerned, we have held that the same does not give rise to any substantial question of law as it is a matter of estimate based on the relevant material seized during the course of search and the statement recorded of the Assessee u/s. 132[4] of the Act as to what was the income of the Assessee who was working as Priest during the relevant period.
4. The relevant findings of the learned Tribunal are quoted below for ready reference.
"27. We have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. The first objection by the learned Authorised Representative is that the original assessment was completed under Section 143(3) and that the original assessment was completed under Section 143(3) and in the reassessment under Section 153A, no addition can be made except based on seized material. We find that the Assessing Officer has placed a copy Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 7/13 of the seized material at page 10 of the assessment order which clearly shows different entries recorded by the assessee including an entry of Mandir and Pooja of Rs.35 lakhs for the F.Y.2005-06. Therefore, the addition made by the Assessing Officer is not based merely on statement recorded under Section 132(4) of the Act. It is pertinent to note that the assessee in the statement had estimated the undisclosed income of Rs.75 lakhs for 3 assessment years under consideration which matches the figures and amounts shown in the seized document relating to Pooja income of Rs.35 lakhs, Rs.20 lakhs and Rs.20 lakhs for the Assessment Year 2006-07 to 2008-09 respectively. We find that there is no ambiguity in the statement of assessee regarding the Pooja income which has been clearly corroborated by the seized material. Thus when there is a sufficient evidence seized material which corroborates the statement of the assessee recorded under Section 132(4) on 23.2.2009 then the subsequent retraction of the statement by the assessee without any corroborating evidence cannot be accepted as the assessee has not explained the statement and how the income shown in the seized material is not correct. Therefore mere retraction of statement without Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 8/13 explaining circumstances as well as corroborating evidence, it cannot be accepted being an after thought. Accordingly, we do not find any substance in this ground of the assessee and the same is dismissed."
5. As regards the third question, we do not find any substantial question of law arising on this issue, which relates to the factual aspects, in view of the categorical finding returned by the Tribunal. The relevant findings of the learned Tribunal are quoted below for ready reference. The Tribunal in paragraphs 46 to 49, has held as under:
"46. During the course of search the document was seized and from analysis of page 75 of the seized material, the Assessing Officer noted that the assessee has paid total amounting to Rs.19 lakhs to one Mr. Hiren Kumar Patel. The assessee claimed that the figure written as 19 represents only Rs.19,000 and not Rs.19 lakhs. The assessing Officer noted that the amount mentioned in the seized material are in the form of abbreviation and which represent the amount in lakhs, not in thousands. The Assessing Officer Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 9/13 has observed that the assessee himself has written Rs.19 lakhs in the form of "19". Therefore, the Assessing Officer treated this amount as Rs.19 lakhs as against the claim of Rs.19,000. The CIT [Appeals] has confirmed the action of the Assessing Officer.
47. Before us, the learned Authorised Representative of he assessee has submitted that there is nothing on record to prove that the assessee has paid the alleged amount of Rs.58 lakhs to Mr. Hirenkumar Patel. He had submitted that the amounts noted down in the margins of the dairy entry assessee right from the beginning has explained this before the Assessing Officer. He has not paid the alleged amount of Rs.58 lakhs as stated by the Assessing Officer what the payments were made, the same were recorded in the books of account. The learned Authorised Representative has submitted that the payments made during the year under consideration were only Rs.82.50 lakhs and the same is recorded in the books of account. There is no material on record to say that the assessee has taken the said sum of Rs.58 lakhs from Mr. Hirenkumar Patel. The learned Authorised Representative has further submitted that it is only an allegation and Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 10/13 assumption of the Assessing Officer and not a real transaction of payment made by the assessee.
48. On the other hand, the learned Departmental Representative has submitted that the Assessing Officer has analysed the entries at page No.75 of the seized material as reproduced by the Assessing Officer at page 30 of the assessment order from which it is clear that the assessee has paid a sum of Rs.18 lakhs on 7.8.2006 and again paid Rs.1 lakh on 18.8.2006, total amounting to Rs.19 lakhs which has been written in the margin as a figure of 19. Therefore the remaining amount written in the margin in the abbreviated amounting to Rs.19 lakhs which has been written in the margin as a figure of 19. Therefore the remaining amount written in the margin in the abbreviated form represents the amounts in lakhs and not in thousands as claimed by the assessee. He has relied upon the orders of the authorities below.
49. We have considered the rival submissions as well as the relevant material on record. The Assessing Officer made total addition of Rs.58 lakhs on account of undisclosed investment being payment made by the assessee out of the books Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 11/13 to one Mr. Hirenkumar Patel. The CIT [Appeals] while confirming the addition has granted the benefit of telescoping to the extent of an addition of Rs.39 lakhs on account of Pooja income and therefore confirmed addition of remaining amount of Rs.19 lakhs. The limited controversy before us is whether the abbreviated or coded amounts written in the margins of the diary at page 75 of the seized material represents the amounts in lakhs or in thousands. The Assessing Officer has considered these amounts as payments made by the assessee in lakhs and therefore calculated the total payment made by the assessee out of books of Rs.58 lakhs. For ready reference we reproduce the entries as well as the numbers written in 04.08.2006 Ch. No.055331 of the 16,65,000 Dhanalakshmi Bank and M.G. 1,00,000 Road.
17,65,000
07.08.06 Cash 35,000
18,00,000
18.08.06 Ch. No.55339 of the 1,00,000
+5 Dhanalakshmi Bank and M.G.
19+1+5+5 Road
30 12/10/06
30+5 - 17/12
35+12+6
53.+.5
Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 12/13 From the numbers written in the margin it is clear that the Assessing Officer took the first number being 19 as sum total of Rs.18 lakhs + Rs. 1 lakh, the payment made by the assessee on 17.8.2006 respectively. The other numbers mentioned in the margins are not recorded in the books of accounts therefore those were considered by the Assessing Officer as payment out of books. As it is apparent from these numbers written in the margin that a proper care was taken for distinguishing the amounts in thousands by putting a point [.] before the number as in the case of last number written as 0.5. Therefore the other numbers written in the margin with the dates clearly indicates the payment made by the assessee in lakhs. Therefore we do not find any error or illegality in the orders of the authorities below on this issue and confirm the addition of Rs.19 lakhs as sustained by the CIT [Appeals].
Therefore we do not find any error or illegality in the orders of the authorities below on this issue and confirm the addition of Rs.19 lakhs as sustained by the CIT [Appeals]."
6. Having heard the learned Counsel for the parties, we are satisfied that no substantial question of Date of Judgment 28-06-2018, I.T.A. No.37/2017 Gopal S. Pandit Vs. The Commissioner of Income Tax & Another 13/13 law arises. The Appeal of the Assessee is liable to be dismissed and the same is accordingly dismissed. No costs.
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JUDGE Sd/-
JUDGE NC