Rajasthan High Court - Jaipur
Commissioner Of Income Tax vs Suresh Kumar Goyal [Alongwith It Appeal ... on 20 May, 2004
Equivalent citations: (2004)190CTR(RAJ)344, [2004]270ITR50(RAJ)
JUDGMENT Y.R. Meena, J.
1. These seven connected appeals involve the common issue, therefore, we heard and disposed of all these appeals by this common order.
2. These appeals are admitted on the questions of law, which read as under:
For asst. yr. 1988-89 in ITA No. 113 of 2002 "1. Whether, in the facts and circumstances of the case, there was any material on record for CIT(A) to direct to tax the lottery amount in the hands of all three brothers?
2. Whether, in the facts and circumstances of the case, the Tribunal was justified and right in law in upholding the order of the CIT(A) deleting the additions made under s. 69 in the hands of one assessee substantively by the AO on the basis of enquiry conducted ?"
For asst. yr. 1988-89 in WTA No. 1 of 2002 "1. Whether, in the facts and circumstances of the case, the Tribunal was justified and right in law in upholding the order of the CIT(A) deleting the additions made in the hands of assessee in the wealth-tax assessment which was based upon enquiry conducted by AO ?"
For asst. yr. 1988-89 in ITA No. 128 of 2003 "1. Whether there was any material on record for CIT(A) to hold that the lottery amount in the hands of all three brothers is to be substantively taxed for the year in question ?
2. Whether the Tribunal was justified and right in law in upholding the order of the CIT(A) deleting the additions made under Section 69 in the hands of one assessee substantively by the AO on the basis of enquiry conducted ?
3. Whether the Tribunal and CIT(A) were right in law in taking a view different than the view of the AO, when the assessee has failed to prove the authenticity of the purchase of lottery ticket and on the basis of evidence the AO has made additions under Section 69 of the Act ?"
For asst. yr. 1988-89 in ITA No. 55 of 2004 "1. Whether, in the facts and circumstances of the case, the Tribunal was justified and right in law in upholding the order of the CIT(A) deleting the additions made under Section 69 in the hands of one assessee substantively by the AO on the basis of enquiry conducted ?"
For asst. yr. 1989-90 in ITA No. 56 of 2004 "1. Whether, in the facts and circumstances of the case, there was any material on record for CIT(A) to direct to tax the lottery amount in the hands of all three brothers ?
2. Whether, in the facts and circumstances of the case, the Tribunal was justified and right in law in upholding the order of the CIT(A) deleting the additions made under Section 69 in the hands of one assessee substantively by the AO on the basis of enquiry conducted ?"
For asst. yr. 1989-90 in ITA No. 131 of 2002 "1. Whether, in the facts and circumstances of the case, there was any material on record for CIT(A) to direct to tax the lottery amount in the hands of all three brothers ?
2. Whether, in the facts and circumstances of the case, the Tribunal was justified and right in law in upholding the order of the CIT(A) deleting the additions made under Section 69 in the hands of one assessee substantively by the AO on the basis of enquiry conducted ?
3. Whether, in the facts and circumstances of the case, the Tribunal and CIT(A) were right in law in taking different view than AO when the assessee has failed to prove about the authenticity of purchase of lottery and on the basis of evidence the AO has made additions under Section 69 of the Act ?
4. Whether, in the facts and circumstances of the case, the CIT(A) was justified in upholding that AO has not conducted the enquiry as per direction whereas in fact the AO has made all efforts to carry out the directions ?"
For asst. yr. 1989-90 in ITA No. 127 of 2003 "1. Whether there was any material on record for CIT(A) to hold that the lottery amount in the hands of all three brothers is to be substantively taxed for the year in question ?
2. Whether the Tribunal was justified and right in law in upholding the order of the CIT(A) deleting the additions made under Section 69 in the hands of one assessee substantively by the AO on the basis of enquiry conducted ?
3. Whether the Tribunal and CIT(A) were right in law in taking a view different than the view of the AO, when the assessee has failed to prove the authenticity of the purchase of lottery ticket and on the basis of evidence the AO has made additions under Section 69 of the Act ?"
3. A search was conducted on 12th Jan., 1988 at the residence of assessee, Shri Suresh Kumar, Shri Bal Kishan and Shri Satish Kumar. All of them are real brothers and amongst other incriminating documents seized, a loose paper was inventoried as E-16, p. 46 contains the contents with the lottery ticket. The draw of lottery held on 17th Dec., 1987. In the inventory E-16, the projected figures Rs. 1,11,00,000 and Rs. 88,80,000 have been shown. The case of the Department is that they have purchased the ticket after draw of lottery and converted the black money into white.
4. The case of Suresh Kumar is that he along with his two brothers namely, Bal Kishan and Satish Kumar purchased the lottery ticket and the lottery draw was open in the names of these three brothers. In the return filed, they have disclosed 1/3rd share of Rs. 88.80 lakhs in the hands of each brother in the asst. yr. 1989-90. The AO has taxed the entire amount of lottery in the hands of Suresh Kumar in the substantive basis in the year 1988-89 and two third of that amount has been taxed on protective basis in the hands' of Satish Kumar and Bal Kishan.
5. They filed appeals before the CIT(A). CIT(A) has remanded the matter back to the AO to make proper enquiry and enquiry should be in detail to establish that they have purchased the ticket in market after draw of lottery held.
6. The ITO has though made some enquiry and got some information from the ITO, Cuttack and again same amount has been taxed, as he has done in the first round. Again these three persons went in appeal. In para 2.4 of the CIT(A)'s order in case of Suresh Kumar, CIT(A) found that the enquiry has not been made properly as directed and on the basis of the enquiry made, the entire amount of Rs. 88.80 lakhs cannot be taxed in substantive basis in the hands of Suresh Kumar.
7. The relevant part of para 2.4 of the CIT(A) order reads as under :
"I have considered the facts of the case. The claim of the appellant is acceptable. The assessment order now under appeal was completed without following the directions of the CIT(A) Rajasthan-I, Jaipur. The only information which was supplied to the appellant was a fax message received by the ITO through the Dy. Director of Income-tax (Inv.), Jaipur from the DDIT (Inv.), Bhuvneshwar, Orissa to suggest that no person named Shri S.K. Singh was a wholesaler or retailer of lottery tickets at Cuttack. This information was supplied to the appellant on 30th March, 1994. The appellant filed his reply on the same day on 30th March, 1994. The following paragraph from the letter of the appellant to the ITO dt. 30th March, 1994 brings out his case during the course of assessment proceedings:
'It is further submitted that we do not know what do you wish to state by means of the said letter. It has never been stated by us that the ticket was purchased by Shri Satish Kumar from Shri S.K. Singh at Cuttack-Orissa. Your attention is invited to the statement of Shri Satish Kumar which has been relied and is lying on your record. We do not know how Shri S.K. Singh has come in the picture and what relevance he has got in the said case. If it is your case that the ticket was sold by Shri S.K. Singh to Satish Kumar, you are requested to kindly let us know on what basis such inference is being drawn. You are also requested to kindly supply us photo copy of all the papers in this regard, It is further submitted that vide our letter dt. 24th March, 1994, we have already invited your attention to the order of the learned CIT(A), Jaipur and the directions which have been given by him. It seems that you are not in a mood to comply with the directions given by the learned CIT(A), Jaipur and want to complete the assessment without following the directions. We can only request you to please keep the directions of the learned CIT(A), Jaipur, in view before completing the assessment.....' The basic queries raised by the appellant in his said letter dt. 30th March, 1994 were not considered by the ITO in his assessment order. It is clear from the assessment order that all the directions given in appellate order dt. 9th Dec., 1991 were not considered by the ITO. The appellate order was not taken seriously by the ITO. This is inspite of the fact that all the directions contained in para 7 of the aforesaid appellate order dt. 9th Dec., 1991 were not questioned in the grounds of appeal taken up by the Department before the Tribunal in the appeal against the appellate order dt. 9th Dec., 1991. Even a copy of p. 46 of Annex. E-16 was not given to the appellant before passing the assessment order. Some enquiries were made by the Department during the pendency of this appeal. No information which could effectively answer the questions raised by the CIT(A) Rajasthan-I, Jaipur in his order dt. 9th Dec., 1991, has been brought on record. In these circumstances, I am of the opinion that the addition of Rs. 88,80,000 made by the ITO in his short assessment order cannot be sustained. The said addition is deleted. The appellant gets a relief of Rs. 88,80,000."
8. Thereafter, the Department preferred the appeal before the Tribunal. The Tribunal has also affirmed the finding of fact of CIT(A) that the entire amount of lottery cannot be taxed in the hands of Suresh Kumar and the Tribunal found that as per the enquiry, the AO has not established the case that the lottery ticket has been purchased in market after draw of lottery, from somebody else.
9. The Tribunal has concluded its finding in para 5 of its order which reads as under :
"Rival submissions have been heard with reference to material on record and case laws relied upon by both the parties. Para 2.4 of the order of the CIT(A) has been reproduced and held as under :
From the Departmental pleadings, it is also borne out that the AO could not do the full investigation. It has also been stated that the AO has done his best efforts to comply with the directions of the CIT(A) but desired results have not come due to non-co-operation and intentional withholding of information by the assessee. Mala fide has also been alleged by the learned Departmental Representative on the group of the assessees but the same have not been proved nor any material has been brought on record in support of the plea so raised. We have also found that the original assessment in this case for making the addition of Rs. 88.80 lakhs was completed on 14th March, 1991 and the same was set aside by the CIT(A) vide his order dt. 9th Dec., 1991 in Appeal No. 160/1991-92 by observing as under :
'........After due consideration, it appears that causing the enquiries from the end and in view of the same, the addition so made deserves to be set-aside. It may be seen that the lottery ticket is stated to have been purchased somewhere in Cuttack. In view of having been to cause the necessary enquiries from the person who sold the ticket with a view to find out as to whether the ticket was really sold at Cuttack as contended by the appellant, whether there was any evidence in regard to sale of the ticket, whether the names of the different buyers are mentioned in the other counterfoils and if so, whether there is any mention of the three names in respect of the counterfoil produced by the appellant. The examination of the seller of the ticket was very essential with a view to find out as to whether the version of the appellant of having purchased the ticket was really correct and if so what prevented the said person for putting forth his claim for bonus/commission. This is more so when no businessman would forgo such amount of commission in respect of the prize winning ticket and that too when the bonus commission was not that petty so as to be ignored. The examination of said person as also document in his possession would have given vital clue to verify the version put forth by the appellant and on the basis of the same, the other facts in regard to having gone to Cuttack from Calcutta, etc., etc., could have been ascertained in a better prospective. Apart from that, the enquiries from the Government of Bhutan also should have been got conducted to the logical end with a view to find out as to who was the person or the distributor in whose favour the tickets were given for the purpose of distribution/sale in the country and wherefrom the prize winning ticket was sold/distributed to the sub-distributor or a local seller. It could also have been ascertained as to whether anyone has put forth a claim about the bonus commission subsequently and depending upon the facts on verification, further enquiries from the recipient of the bonus commission as well could have been got conducted with a view to justify the different facts on a proper footing. After collecting all these information as also the facts from the so-called seller of the ticket, the appellant should have been confronted with the different types of evidences with a view to invite the objection and only thereafter, the acceptability or otherwise of appellant's claim of prize amount should have been decided. As all these require a detailed enquiry, verification of different facts as also the examination of the local seller, either personally or by issue of a commission, it would be fair and reasonable if the impugned addition is set-aside with a direction that the different aspects as discussed above may be enquired into and after confronting the appellant with the results, the evidence, if any, the acceptability or otherwise of the prize winning amount should be decided. It may also be stated here that as per the normal practice, a single ticket is not purchased, by different persons and normally it is purchased in a single name. In view of this, the concerned authority is directed to get the verification done separately as to whether the ticket was purchased jointly by the three brothers and what is the evidence thereof for subjecting the amount to tax in the correct hands. The appellant may also be given the copy of the incriminating material referred to at page No. 46 of Annex. E/16 on which it is harping again and again of having been either not shown or not provided with. As such, the addition in question is set aside for fresh consideration....' The AO has acted by writing a letter as late as on 10th March, 1994 to the Asstt. Secretary, Royal Government of Bhutan, at the fag end, when the assessment was getting-time barred. Another document utilised by the AO is the fax message of Dy. Director of Income-tax (Inv.), Orissa to the Dy. Director of Income-tax (Inv.), Jaipur dt. 29th March, 1994, wherein it was communicated that no person in the name of Shri S.K. Singh was ever a wholesaler or retailer of lottery ticket at Cuttack (Orissa). That has been done after setting aside assessment order without caring to apply his mind to the important aspect of the matter that the assessee had never stated before any of the IT authorities that they purchased the ticket from Shri S.K. Singh at Cuttack (Orissa).
The AO also did not make any effort to find out if not Shri S.K. Singh, then who else, neither did he find the person as to whom the alleged payment was made by the assessee nor that who has benefited from the alleged transaction.
We have also perused from the Departmental paper book from pp. 62 to 64 and find that it is M/s Sanjay Agency, F-78-79, Bhagat Singh Market, New Delhi-110001, who have furnished the particulars of the agent stating to be Mr. Ramesh Kumar Daga. Having brought this on record, it was the Sanjay Agency and all the persons mentioned in that letter from where necessary enquiry as per direction could have been proceeded to and not that the assessee can be said to have withheld the information available with him. It was incumbent upon the AO to ascertain the role of all these persons in the alleged transactions and bring on record some positive material before coming to the conclusion.
The powers of the Department are not confined to the assessee alone but enquiries could be made by taking effective steps as per procedure prescribed under the Act, which also includes issuance of summons and commission, etc. Despite there being enabling provisions available under the Act for carrying out the enquiries as well as investigation, there was no handicap or impediment with the AO in acting in accordance with the directions given by the CIT(A), more particularly when sufficient time was available from the date of setting aside to the date of completion of the assessment. Under such circumstances and in view of the observations and facts as brought out by the CIT(A) on record, we do not find error in the order of the CIT(A) for coming to the conclusion that no information, which could effectively answer the questions raised by the CIT(A), Jaipur, in his order dt. 9th Dec., 1991, have been brought on record and that all the directions given in appellate order dt. 9th Jan., 1991 were not considered by the ITO. In view of this, we hold that there was no error in drawing an adverse inference by the CIT(A) against the AO and in coming to the conclusion that the addition of Rs. 88.80 lakhs made by the AO in his short assessment order cannot be sustained. We also find that the addition in this case has been made under Section 69 of the IT Act. The perusal of Departmental paper book p. 1, stated to be a copy of Annex. E-16/46, does not reveal of any investment made by the assessee in the prize winning ticket. The appraisal report furnished at pp. 2 to 4 also shows one of the important observations and suggestions made by the office of Director of Income-tax (Inv.), which reads as under:
'(iii) There is a very peculiar feature coming out in this case that assessee Shri Satish Kumar has purchased a lottery ticket of Bhutan State in the last week of November, 1987 in the name of Shri Suresh Kumar Goyal amounting to Rs. 1,11,00,000 (ITO may see the statement of Shri Suresh Kumar Goyal recorded on 12th Jan., 1988). The ITO is requested to verify and investigate this matter deeply conducting necessary inquiries in order to ascertain the genuineness of the claim.' From such observation also, it cannot be said that the investment has been made in the prize winning ticket, rather the observation given in the appraisal report only suggests that a lottery ticket has been purchased in the last week of November, 1987 whereas we find that such a lottery ticket became a prize winning ticket only on 17th Dec., 1987 after the declaration of result of 438th draw of Royal Government of Bhutan. No material has been brought on record in the entire investigation as well as assessment proceedings to show that the assessee has made investment in prize winning ticket for which onus was on the IT Department, which has not been discharged by it. The whole addition in asst. yr. 1988-89 appears to have been made merely on the basis of suspicion and the same does not stand the scrutiny of appeal. Keeping in view the entirety of facts and circumstances into consideration, we do not find any material, which calls for interference in the order passed by the CIT(A). Accordingly, the ground raised in all the three appeals preferred by the Revenue for asst. yr. 1988-89 stand rejected."
10. There is a concurrent finding of fact by the CIT(A) as well as by the Tribunal that on the basis of enquiry made by the AO, it cannot be believed that assessee Suresh Kumar has purchased this lottery ticket in market after lottery draw held, from somebody else to convert his black money into white.
11. Once the AO failed to do so and concurrent finding is there in favour of the assessee, we see no reason to interfere in the concurrent finding of both the authorities, i.e., CIT(A) and the Tribunal. Not only that, the fact remains that Rs. 88.80 lakhs has already been offered and taxed in the hands of all the three brothers equally which they have disclosed in 1989-90 and there is no justification to tax the same amount in the asst. yr. 1988-89 specially when the Department has failed to establish that the lottery ticket has been purchased after lottery draw held. We also see no justification to tax the entire amount in the hands of Suresh Kumar even in 1989-90. The amount of lottery prize be taxed in the hands of all the three brothers as has been shown by them.
12. Even in cases when more than one view is possible in the facts and circumstances of the case and if one possible view has been taken by the Tribunal, it cannot be said that the finding of the Tribunal is perverse. In the case in hand, it cannot be said that the Tribunal has taken the impossible view in the facts and circumstances and material on record.
13. In the result, we hold that CIT(A) as well as the Tribunal are justified in deleting the entire amount of addition in the hands of all the three brothers in the year 1988-89 and rightly directed that l/3rd of the amount of Rs. 88.80 lakhs should be taxed in the asst. yr. 1989-90, in the hands of each brother which they have disclosed in the returns.
14. The WT appeal is consequential. The entire amount of Rs. 88.80 lakhs is included in the wealth of the assessee, Suresh Kumar, on the basis of addition made in the income-tax proceedings in the hands of Suresh Kumar. As in the IT appeals, we have taken the view that Rs. 88.80 lakhs is a result of lottery draw in the name of three brothers and now the three brothers have offered one third of that amount in their income-tax returns and that should be taxed as offered by all three brothers, therefore, the AO has wrongly included Rs. 88.80 lakhs in the wealth of assessee Suresh Kumar in the asst. yr. 1988-89.
There is no justification to make such addition in the wealth-tax assessment of Suresh Kumar. He has already shown one-third of Rs. 88.80 lakhs as his wealth in the wealth-tax returns in the year 1989-90, that be accepted.
Thus, no interference is called for in the decision of Tribunal in wealth-tax appeal also.
In the result, all the seven appeals are dismissed.