Punjab-Haryana High Court
Deputy Commissiner Of Income-Tax, ... vs Om Parkash Aggarwal on 30 September, 2014
Bench: Rajive Bhalla, Amit Rawal
ITA-78-1999 [1]
IN THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH
ITA-78-1999
Date of decision: 30.09.2014
The Deputy Commissioner of Income
Tax Investigation Circle, Faridabad ..... Appellant
VERSUS
Om Parkash Aggarwal (HUF) ..... Respondent
CORAM: HON'BLE MR. JUSTICE RAJIVE BHALLA
HON'BLE MR. JUSTICE AMIT RAWAL
Present: Mr.Tejinder K. Joshi, Advocate, for the appellant.
Mr.Sanjay Bansal, Senior Advocate, with
Ms.Rajni Pal, Advocate, for the respondent.
*******
RAJIVE BHALLA, J. (ORAL)
The revenue is before us challenging order dated 30.11.1998, passed by the Income Tax Appellate Tribunal, Delhi Bench 'B', New Delhi, (hereinafter referred to as the 'ITAT') dismissing an appeal filed by the revenue while accepting an appeal filed by the assessee.
Before we refer to the arguments and record our opinion, it would be appropriate to briefly refer to the facts.
The respondent-assessee is an HUF which filed its return for assessment year 1989-90, declaring an income of Rs.23,280/- alongwith agricultural income. The Income Tax Department searched the business and residential premises of the assessee on ITA-78-1999 [2] 28.04.1988 and recovered cash and jewellery. The assessee surrendered Rs.1,25,000/- as cash and Rs.75,000/- being the value of silver articles seized from the premises. The assessing officer passed an order making additions on account of declared cash, value of silver seized from the premises and unexplained investment in property during the assessment year 1988-89. The assessee accepted the assessment and deposited the tax demanded by the department. The assessing officer, however, included the surrendered income etc. in the assessment year 1989-90.
Aggrieved by the assessment order, the assessee filed an appeal. The Commissioner of Income Tax (Appeals), Faridabad, (hereinafter referred to as the 'CIT(Appeals)') dismissed the appeal but granted relief by reducing the addition of Rs.75,000/- to Rs.42,000/-.
Both, the assessee and the revenue filed separate appeals. After due consideration of the arguments, the record and the impugned orders, the ITAT set aside the order passed by the CIT (Appeals) as well as the assessment order primarily on the ground that as additions, had already been made in the year 1988-89, the assessee had already discharged his tax liability in assessment year 1988-89 and proceedings initiated under Section 263 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') had admittedly been dropped, the assessee could not be taxed once again for the ITA-78-1999 [3] same surrendered/recovered income in the subsequent assessment year 1989-90.
Counsel for the revenue submits that as the search took place on 28.04.1988, the assessee was to be assessed for these additions in the year 1989-90, in view of Section 69-A of the Act. The mere fact that the assessee may have been wrongly assessed in assessment year 1988-89, does not absolve the assessee of his liability to be assessed in assessment year 1989-90. If the assessee was wrongly assessed in the year 1988-89, it could have filed an appeal and assessment if erroneous, would have been set aside. The substantial question of law, therefore, must necessarily be answered in favour of the revenue by setting aside the order passed by the ITAT.
Counsel for the respondent while not denying the factual matrix of the revenue's plea, submits that as the assessee had already been assessed and paid the requisite tax, even if the assessment order passed in the present case is restored, the tax effect would be nil. The appeal in the present case is but an academic exercise and as the ITAT has taken a rational view of the matter even if the substantial question of law is answered in favour of the revenue, the order passed by the ITAT may be affirmed.
We have heard counsel for the parties, perused the impugned orders as well as the substantial question of law, which ITA-78-1999 [4] reads as follows: -
"Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was justified in law in deleting legally and correctly made additions in A.Y. 1989-90 just because some addition was not so correctly made in some other assessment year?"
An answer to the substantial question of law framed does not pose any degree of difficulty as Section 69-A of the Act necessarily requires an assessee, who is found to be owner of any money, bullion, jewellery, or valuable article, to be assessed in the relevant assessment year and not in the financial year in which the assessee was found to be owner or in possession of such money, bullion and jewellery etc. The assessing officer was, therefore, required to assess the assessee in assessment year 1989-90. The question of law is, therefore, answered in favour of the revenue in so far as it concerns the year in which the assessee was required to be assessed but this answer, in our considered opinion, would not suffice to set aside the order passed by the ITAT.
Admittedly, though in violation of Section 69-A of the Act, the assessee was assessed for the declared income as well as the seized silver in assessment year 1988-89. It is not disputed that tax on the declared income and seized silver etc. was paid in compliance with assessment order passed in assessment year 1988-89. Thus, ITA-78-1999 [5] even if we were to hold by relying upon Section 69-A of the Act that the assessee was to be assessed, in view of the search dated 28.04.1988, in assessment year 1989-90, the tax effect namely any benefit to the revenue would be nil. The revenue having already received tax payable by the assessee, restoration of the order passed by the assessing officer would not result in any revenue gain or loss to the revenue and, therefore, while holding that the assessee should have been assessed in assessment year 1989-90, are in complete agreement with the opinion recorded by the ITAT, which reads as follows: -
"7. ......In the circumstances, ordinarily the addition is called for in the A.Y. 1989-90, the one under appeal. However, it is a fact that the addition in this regard has already been made in A.Y. 1988-89. From the facts as stated above it is clear that in addition to the surrender made by the assessee both in respect of the cash as well as jewellery, the assessing officer further added a sum of Rs.75,000/- bringing the total to Rs.2,75,000/-. Though the basis were not given the fact remains that the addition called for from his point of view was the one as made. It is also a fact that proceedings initiated under section 236 of the also dropped. It is not known whether they were dropped because the assessment for assessment year 1989- 90 had been made or for the reasons given in the letter as addressed to be the assessee or otherwise. The fact remains that the matter attained finality at the end of the learned Commissioner of Income-tax (Administration). In the circumstances, it is difficult to hold that the addition for the ITA-78-1999 [6] same items could be made in two assessment years. This is more so when the facts pertaining to the search as well as the explanation rendered by the assessee were before the assessing officer while framing assessment for assessment year 1988-89. No new facts had come to the notice of the subsequent assessing officer to warrant the addition made for assessment year 1989-90. In view of this it is not necessary to offer comments on the merits of the addition.
8. Coming to the appeal filed by the revenue the order of the Ld. CIT(A) has been challenged on the following grounds: -
"On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and facts
(i) In restricting addition of Rs.65,000/- to R.40,553/- on account of unexplained investment in silver stock.
(ii) Restricting addition of Rs.96,226/- to Rs.35,200/- on account of gold jewellery belonging to Smt.Shakuntala Devi."
It would also be appropriate to point out that the Commissioner of Income Tax had initiated proceedings under Section 263 of the Act, a provision that enables the Commissioner to revisit an order or proceedings that have led to a loss of revenue or are in any manner prejudicial to the interest of the revenue. The proceedings as admitted by counsel for the revenue and recorded by the Income Tax Appellate Tribunal were dropped thereby in essence lending credence to the findings recorded by the Tribunal that even if ITA-78-1999 [7] the assessment order passed in the assessment year 1989-90 is not restored, it would not cause any loss to the revenue.
Consequently, while answering the question of law in favour of the revenue, we are not inclined to set aside the order passed by the ITAT and, therefore, dismiss the appeal.
[ RAJIVE BHALLA ]
JUDGE
30.09.2014 [ AMIT RAWAL ]
Shamsher S.Sabharwal JUDGE
SHAMSHER SINGH
2014.10.27 12:42
I attest to the accuracy and
authenticity of this document
Chandigarh