Gujarat High Court
Commissioner vs Radhe on 11 November, 2008
Gujarat High Court Case Information System
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TAXAP/760/2008 14/ 15 ORDER
IN
THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX
APPEAL No.760 of 2008
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COMMISSIONER
OF INCOME TAX CENTRAL-I - Appellant(s)
Versus
RADHE
ESTATE DEVELOPERS - Opponent(s)
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WITH
TAX
APPEAL No.719 of 2008
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THE
COMMISSIONER OF INCOME TAX-I - Appellant(s)
Versus
SHRI
VASANT S. ADANI - Opponent(s)
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Appearance
:
MRS MAUNA M BHATT for Appellant(s)
: 1,MR MANISH R BHATT for Appellant(s) : 1,
None for Opponent(s) :
1,
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CORAM
:
HONOURABLE
MR.JUSTICE D.A.MEHTA
and
HON'BLE
SMT. JUSTICE ABHILASHA KUMARI
Date
: 11/11/2008
COMMON
ORAL ORDER
(Per : HONOURABLE MR.JUSTICE D.A.MEHTA) Both these appeals are taken up for hearing together considering the fact that the impugned order of the Tribunal is a common order and the facts are interrelated.
In Tax Appeal No.760 of 2008 appellant-revenue has proposed the following five questions:
?SWhether on facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the department did not challenge the decision of CIT(A) on validity of issuance of notice u/s. 148, ignoring the ground no.2 & 3 of the department???
?SWhether on facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the reopening of the regular assessment was not possible on the basis of seized material, ignoring the fact that the Assessing Officer formed ?Sreasons to believe?? on the basis of subsequent enquiries conducted u/s. 133(6) of the Act???
?SWhether on facts and in the circumstances of the case, the Appellate Tribunal was justified in law in holding that the reopening amounted to ?Schange of opinion??, without considering the correct legal position, fact that there was no formation of opinion in the earlier assessment orders in this regard and the notice was issued within 4 years from the end of assessment order and hence proviso to section 147 was not applicable???
?SWhether on facts and in the circumstances of the case the Appellate Tribunal was justified in law in holding that the addition made u/s. 69C prior to 01.04.99 gets nullified by allowing business expenditure of similar amount without considering the correct law that sec. 69C is a deeming provision enabling the Assessing Officer to assess the income but there was no provision for allowing expenditure as held by Gujarat High Court in the case of Fakir Mohmmad Haji Hasan 237 ITR 290???
?SWhether on the facts and in the circumstances of the case, the Appellate Tribunal is justified in law in deleting the addition of Rs.1.85 crores made on account of unexplained cash payments???
In light of the view that the Court is inclined to adopt, it is not necessary to deal with the controversy proposed by question Nos.[B], [C], [D] and [E]. For Assessment Year 1994-95 in case of the respondent-assessee firm original assessment completed under Section 143(3) of the Income-tax Act, 1961 (the Act) was reopened under Section 147 of the Act by issuance of notice dated 01.12.1998. It is the case of the appellant-revenue that the respondent-assessee firm made payment of Rs.1.85 crores in cash to one Shri Vasant S. Adani, respondent-assessee in Tax Appeal No.719 of 2008. While holding that the payment of Rs.1.85 crores was liable to be taxed as income in hands of respondent-assessee firm by treating the same as undisclosed investment, the Revenue also brought to tax the said amount in hands of Shri Vasant S. Adani as undisclosed cash payment received from M/s. Radhe Estate Developers.
Radhe Estate Developers challenged the matter by way of appeal before Commissioner (Appeals), inter alia, challenging the reopening under Section 147 of the Act as well as challenging the addition of Rs.1.85 crores on merits. Commissioner (Appeals) in his appellate order dated 12.06.2002 struck down the reopening as bad in law vide Paragraph No.5.8 by holding that it was not open to the revenue to reopen a regular assessment on the basis of a document seized during course of search and subsequent inquiry based on such document post a block assessment already made in hands of the assessee, namely, Radhe Estate Developers. Commissioner (Appeals) also dealt with the issue on merits and came to the conclusion that no addition could be made on merits also.
Revenue carried the matter in appeal before Tribunal. The Tribunal has upheld the order made by Commissioner (Appeals) in toto, both regarding challenge to reopening and on merits. In the impugned order the Tribunal has recorded in Paragraph No.2 that ?S... The following sole ground are raised by the Revenue in its appeal??. The said ground reads as under:
?SThe ld. CIT(A) has erred in law and on facts in deleting an amount of Rs.1.85 crores being cash payment made to Shri Vasant Adani and Shri Harshad Patel.??
After hearing the parties, in Paragraph No.13 of the impugned order, the Tribunal has held as under:
?S13. We have heard the rival contentions and perused the material available on record. Facts and circumstances have been narrated in (details above. We find merit in the argument of the ld. counsel for the assessee that the Department has not challenged the findings of the CIT(Appeals) that re-opening of assessment is not proper, when the Department has not challenged this finding, the re-opening being bad in law becomes final. ...??
Learned Senior Advocate appearing on behalf of the appellant-revenue has vehemently contended that the Tribunal has committed an error in law in only considering Ground No.1 while ignoring Ground Nos.2 and 3 of appeal filed by the Revenue before the Tribunal. In support of the said contention attention was invited to the following three grounds of appeal which have been reproduced in the memorandum of present appeal:
The CIT (A) has erred in law and on facts in deleting an amount of Rs.1.85 crores being cash payment made to Shri Vasant Adani and Shri Harshad Patel.
On the facts and in the circumstances of the case, the CIT (A) ought to have upheld the order of the A.O. It is therefore, preyed that the order of the CIT (A) may be set aside and that of the Assessing Officer be restored to the above extent.
Learned counsel submitted that ground Nos.2 and 3, though general in nature, are wide enough to take within its sweep the controversy sought to be raised by proposed question No.1 and the Tribunal ought to have come to the conclusion that the revenue had challenged the decision of Commissioner (Appeals) on validity of reopening under Section 147 of the Act. That in fact when the Revenue sought restoration of the assessment order made by the Assessing Officer both challenges, namely challenge to reopening and challenge on merits, had been raised before the Tribunal in the appeal filed by the Revenue against the order made by Commissioner (Appeals).
The contention raised on behalf of the Revenue does not merit acceptance. On a plain reading of the aforesaid three grounds of appeal it becomes apparent that the Tribunal was correct in law in holding that the sole ground of appeal was the challenge to deletion of addition of Rs.1.85 crores. The so-called ground Nos.2 and 3 are not grounds of appeal. The so-called ground No.2 merely records a submission of Revenue as to what Commissioner (Appeals) ought to have done while dealing with the appeal filed by the assessee. Similarly, so-called ground No.3 is only a prayer clause and when the same is read the only relief that is prayed for, which comes across, is restoration of the order made by Assessing Officer to the extent of deletion of addition of Rs.1.85 crores, considering the use of words ?Srestored to the above extent??.
In the circumstances, it is not possible to accept the contention of revenue that the Tribunal ought to have dealt with the challenge as to reopening on the basis of so-called ground Nos.2 and 3 raised by the department before the Tribunal. In fact the Tribunal was justified in holding that the department had not challenged the decision of the Commissioner (Appeals) on validity of reopening of the original assessment and that the reopening was bad in law, and that the said finding had attained finality.
Once that position is clear, strictly speaking, it was not necessary either for Commissioner (Appeals) or the Tribunal to enter into any discussion on merits of the controversy. The reopening, having been held to be bad in law, any addition made during course of such reopened assessment would, as a consequence, go. In the circumstances, the Court does not find it necessary to deal with the merits of the addition in question as the finding that the reopening is bad in law has attained finality at the level of Commissioner (Appeals) in the year 2002.
In the circumstances, in absence of any question of law, much less a substantial question of law, Tax Appeal No.760 of 2008 is dismissed.
In so far as Tax Appeal No.719 of 2008 is concerned, the addition made in hands of Shri Vasant S. Adani as recipient was challenged before Commissioner (Appeals) who, vide order dated 23.05.2003 recorded as under:
?S4.3 I have carefully considered the assessment order and the submissions made by the Authorised Representative of the appellant. I find that the entire basis for making the addition is draft agreement found from Arun B. Shah in which the name of the appellant is written as the transferee alongwith Harshad Patel. This document is not signed by any of the parties. In the absence of any such signature it cannot be held that such document has in reality been executed or such transaction has in reality been carried out. In the circumstances, it is not correct to presume that the appellant received any consideration for transfer of his administrative control over the land. It is a fact that the land was owned by the society. It is also the fact that the appellant was not office bearer of the society prior to such agreement. Therefore, there is no reason for presuming that the assessee transferred any of his rights in the land as per the said agreement and received consideration for transfer thereof at Rs.1.85 crores. For this reason itself the addition requires to be deleted.??
Thereafter, Commissioner (Appeals) has also referred to the findings of Commissioner (Appeals) in case of Radhe Developers Limited to hold that the said findings are equally applicable to the case of the said assessee.
Revenue carried the matter in appeal before the Tribunal in case of Shri Vasant S. Adani also. The Tribunal, in its consolidated order dated 25.05.2007, has reproduced the findings of Commissioner (Appeals) in Paragraph No.17 of the order and thereafter stated that as the Tribunal has deleted the addition on merits in case of Radhe Estate Developers the addition in hands of the recipient also cannot be sustained.
The learned Senior Counsel appearing for the appellant-revenue has reiterated the reasons which weighed with the Assessing Officer in making addition in hands of the recipient assessee.
As can be seen from the order of the Commissioner (Appeals) it has been found on facts after considering the evidence on record that the entire basis for making addition is a draft agreement found from one Shri Arun B. Shah and the said document contains the name of Shri Vasant Adani as transferee along with one Shri Harshad Patel. It has further been found that the document has not been signed by any of the parties. Commissioner (Appeals) has further recorded that in absence of any signature by any of the parties it was not possible to hold that the document had in reality been executed or that any such transaction as reflected by the document had in reality been carried out. Commissioner (Appeals) has, therefore, come to the conclusion that there was no evidence to raise a presumption that Shri Vasant Adani had received any consideration for transfer of the so-called administrative control over the land belonging to the society. It has also been found by Commissioner (Appeals) that Shri Adani was not an office-bearer of the society prior to the draft amendment. In the circumstances, Commissioner (Appeals) held that there was no reason for presuming that Shri Adani had transferred any rights in the land as per the said unsigned document or received any consideration for transfer at a sum of Rs.1.85 crores. It is in light of the aforesaid findings that Commissioner (Appeals) had deleted the addition in hands of Shri Adani.
The Tribunal has confirmed the aforesaid order of Commissioner (Appeals), though on a different ground. However, considering the findings of fact recorded by Commissioner (Appeals), after appreciation of evidence on record, the final conclusion of the Tribunal is not required to be disturbed. In light of the findings of fact on record the impugned order of Tribunal does not give rise to any question of law, much less a substantial question of law. Accordingly, Tax Appeal No.719 of 2008 is dismissed.
For the reasons recorded hereinbefore, both the appeals are dismissed.
Registry to place a copy of this order in connected matter.
Sd/-
[D. A. MEHTA, J] Sd/-
[SMT.
ABHILASHA KUMARI,J] *** Bhavesh* Top