Karnataka High Court
Shyamlal Aggarwal vs The Acit (Inv) Circle 4(2) Bangalore on 16 April, 2008
Bench: Deepak Verma, Anand Byrareddy
HG Bangalors, | ... RESPONDENT | OOS (By Shri:Aravind K.V. Advocate for Shri M. V. Seshachala, Advocate) arising out of order dated 13.08.2003 passed in ITA Nos.690 and IN THE HIGH COURT OF KARNATAKA AT BANGALORE a DATED THIS THE io' DAY OF APRIL 2008 PRESENT: re THE HON? BLE MR. Jus ICE DEEPAK VERMA ve bas THE HON'BLE MR. TUS TICE ANAND BYRAREDDY LL AL No, 475/2003 = BETWEEN. Sri Shyamlai 'agar wall, No. 52, Richmond Cirele Plaza, Bangalore-25. mo APPELLANT (By Shri, M.V. Javali, Advocate) ; The Assistant Commissioner of Income Tax ¢ (Inv. ) Circle-4(2) sak shake og This ITAis filed under Section 260-A of I. T. Act, 1961 691/Bany/1996 for the Assessment years 1986-87 and 1987-88. ES This appeal having been heard and reserved and coming on 7 for pronouncement _ of ween ~ this... day, ANAND. -- JUDGMENT
Heard the Counsel for the partes, -
2. This appeal is filed by the | -assessee - pertaining io the assessment years 1985-87 and 1987-88. "The ¢ appeal is heard and disposed ofo on the ution of la rise in the tiemorundiisi of appeal.
3. The facts giving rise 7 the appeal is as follows:
oe - The assessee is an individual. He is the Managing Director of a Company, namely, Samrat Housing and Leasing Company Fite (SHILC, for brevity). The assessee filed his return of , income for ihe above two years declaring an imcome of a yy Rs. 34,420/- iad Rs.36,450/-, respectively. It transpires thai a ~ search was conducted by the Depariment of Income Tax, in the premises of the assessee on 26.7.1990, in terms of Section 132(1) we & of the Income-Tax Act, 1961 (hereinafter referred to as the - Act' for brevity). During 'the course 'of the "search "certain incriminating maierials | - evidencing - : 'unaccounted investments ~ made by the ussessee in the - Share Capital of SHLC were found "and seized, The | Department had carried oul furiker investigation - and verification with regard to "such share holdings "on : the basis of material obtained at 'the. . search, The assessment was concluded and a sum of Rs.21.29 lakh was edded as unaccounted invesiments for the said two assesement years.
4. - . These orders were challenged by ihe assessee belore the "Commissioner of Income Tax(Appeals), who by his order daied 287.1992, sei aside the same and directed the assessment officer
- to re-do the assessments. The Appellate Authority held thai even ifan adverse inference could be drawn against the assessee, eS as regards ihe investments in question, the additicns couid only». be made in ihe hands of the inveslee ce anpany ¢ and mat ihe the a diajessoe - as an individual. Further, as s evidence wis ded by th . the parties for the first ime, ai. the appellate stage before the Appellaie Authority, it was felt that the evidence. 'equired to be examined afresh and accordingly the asdeusinenti were set aside.
5. Pursuaal fo the renmand order, , the assessmenis were framed and finalized on 4. i 993. by virtue of which Rs.5 25 lakh was"
added as unexplained invesiment in the shares of SHLC, by the _ assesvee ler each of the said assessment years.
6. The Assessing Officer also found that the additions made in the assessments, in relation to the unexplained investmenis "were made on account of independent enquiries by the : Department - The assessee on bemg confronted with the information gathered -- filed a revised computation of toial income offermg an unexplained amount of Rs.10.50 lakh for taxation. E The Assessing Officer opined that the purported admission Was being made only with a view to side-step the process of enquiry -- conducted by the Depariment and proceeded 'to levy penaliy under Section 271(1 )(c) of the Act.
7. During ihe course of the penally picdoedings the assessee had canvassed. that he had -oluatari ¥ 'offered ihe impugned income, to avoid 'proinicted - 'Tifigation on the imphed understanding { that penally ering would noi follow. The Assessing Officer pegaled ihe plea and passed orders. The levy of penalty. was cbulenged im appeal before the Commissioner of | InwomeTe ux (Appeal), who i allowed the appeals and deleted the levy of penalty. *.
- 8 The Revenue having challenged the appellaie orders before a ~ the Income. Tax Appellaic Tnibunal and the Tribunal having m : tum reversed the orders of the Commissioner of Income-Tax ae (Appeals) and having resiored the orders of penaliy, the present: . appeal is filed before this Court by the assessee. |
9. This appeal coming on fox admission the: same was. admitted by order dated. 22.1 2064, while holding thai the following, questions of law would arise for + consideration:
"i i) Whether the i "ribunal commit ted an error in relying on the 'bec 'ision in 253 IIR 99 and fuiling to rely on. the decision in 251 JER R 9?
Gi) Whether the f. vibamal oughi to have applied explanation given to Section 271 (Lic) of the Act fo the ussessee 'S Case?"
10. ~ Shri M. Lv. Javali appearing for ihe appellant contends as 7 follows:
'That the Tribunal was in error in holding that there was "never an unambiguous offer of unexplained invesimenis, by the : assessee, of Rs.10.50 lakh. The Counsel would seek to demonstrate that there is material on record to indicate thai. it is S a i only on the basis of the assessee's offer that the "onder. under Section 132(5) of the Act was passed, which j As consistent, with the siatemenis made under Section 13214) "isd the 'revised computation of income sintemenit. filed by ihe < cw and duly accepied by the Assessing C Officer himself | li is contended that the Tribunal has failed io apply the ralio of Sir Shadiiai Sugar Mills case = 168 TTR 705 -- In that, merely because d the awoament order 1s accepted by not filing an appeal und thereh 2y. -- the -arkdticig made -- it would noi amount to & Aeliberate cengealment, | The Tribunal has completely overlooked the fact thal the
- assesment order has adopied the exact amount offered as additions and this is consisient with ihe assessee's plea that this 7 was a voluntary offer in order io buy peace.
| Thal the Tribunal was in error in applying the decision im | ; K P.Madhusudhanan vs. CIT 251 ITR 99 which was an auihorily for the proposition ihat no express invocation of the Explanation io Section 271 in the notice under Section 271 is necessary belore Zz voluntary payment of iax pursuant to such admission and. would.
12. On these conientions, 11 is seen that the 'Commissioner of Income-Tax (Appeals) by itis order dated 28.7.1992, in respect of the relevant assessment yeutrs had issued specific directions as to manner m which the Assessing Officer was: required io address the material evidence in addressing the issues on hand. However, ihe . assessment orders 7 famed and finalised offer such remand are sileni. as lo the perticuiars in arnving ai the additions made. 7 Wherwas, ihis consistent with and has clearly adopted the revised . computation of total come that was voluntarily offered by the | assessee se a sum of Rs.5.25 lakh each, for the two relevani *\ asuessinen! years. This lends credence to the claim of the » appellant that the additions were a voluntary offer of the assessee : in order io buy peace. The Supreme Court has im the case of Suresh Chandra Mittal accepted the contention of an assessee in similar circumstances. The decision in 251 ITR 9 would apply io S