Karnataka High Court
Smt Kailashi Devi G Agarwal vs Income Tax Officer on 22 September, 2008
Bench: V.G Sabhahit, S.N.Satyanarayana
IN THE. HIGH COURT OF KARNATAKA
CIRCUET BENCH AT DHARWAB
DATED THES THE 22"'nAY OF SEPTEMBER-2§G$ "x
PRESENT ,»w-
THE HON'BLE MR.JUSTICE ¢,G;SABHAaIT_ »7=w""
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THE HON'BLE MR.JUSTICE §:N}sA$YAfiARAiANfi
INCOME TAX A§PEAL MQ§1se/2994
1 SMT KAILASHI DEVI G fiGARWAL"*ww
1TTAG1.MhRuTH: GALLI, ;*.)
HUBLIE " '=. Vi. 4.:
____ H *x_-~¢_; , ~_' . APPELLANT
(By spi A s3g3KAR,'AUv ;
AND:
1 Iwccmt TAX o£FicEa?
WARD I (3y_*' '
jHU3¥I .
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':2:§y»sr1_M,v;s§EsHAcHALA, ADV )
_____ RESPENTDENT
3
".'WgHiS }1.iLA. IS FILED U/S. 26oAT 0? THE
xnccms TAX ACT, 1951 ARISING our or ORDER carsn
'_19.12;2oo3*§Ass3D IN ITA NO.
605/BANG/2003 FOR
'THE ASSES.SME'.NT YEAR 1998-99 PRAYING THAT THIS
p ',B_LE "COURT MAY BE PLEASED TO FORMULATE THE
_ 'SUBS'I'F~LNTIRL QUESTION OF LAW STATED THEREIN AND
.ALLVO'$'L'-A"THE APPEAL AND SET ASIDE THE ORDER OF THE}
°r_ "TRIBUNAL BEARING ITA NO.
SOSIBANG/2003 DATED
19.12.2993 ON THE VRLIDITY CF ASSESSMENT FOR THE
ASSESSMENT Yflfifi 1998-99 ETC. vhl
THIS APPEAL COMING ON FOR SEARING THE$ Sgt; *3
5333331? J., DELIVERED THE FOLLOWING:
This appeal by the assesseeiie fiieo"bei§§wV
aggrieved by the order paeeeo by the the ih§5me9
tax Appellate Tribunai, Bna§niore_Benoh~£wSated
19.12.2003 in 1TA.fibi§0S;gé§g}§§o§=_con£irming
the order passed by the hpgmgggihnefi fir Income-
tax, (Appeais;nH§§ii,Ed§t%d_r7;ii§d63.
2. The essentielwfeots of the case leading
to this apoea1.are_esSfoilows:
fThe_as$essee had filed return of income on
iK}€{1@,1998.&eélaring total income of Rs.92,950/-
The. same R335 ;éelected for scrutiny" with prior
V.appro¢al?of'idditional CIT, Range 1, Hubli. The
S"qSaS$essee "had shown capital loss on sale of
,Nfiiamon$ amounting to Rs.l,O38/- and perusal of
13 w
ifl*pernonal capital accounts revea Mthat there is
accretion of Rs.8,29,330/~ on account of sale of.
gold jewellery and diamond. Notices, nnderj 2
Section 143(2}(1) were issued on 3@é9;1§§§t
informing the assessee to appear on 14riG}199§' 5
with the books of accounts, billegzfiouoheraaahdpd'
details of_ assets acqnired, d $he_h;seésseé
appeared through Sri.R.fi,Rdarwa;, .'a*-_Charted
Accountant and prodnoed, the !hoohe';of account
maintained by hflr a3Wi#@E§¢@§9£rffdM?s.Kailash
Traders. 'Io éehowfi§that_:§oidh"Qas sold to
sri.Mana1ak;13;ni;_"};_xfi§§¢:ei;"i:';étr§.%j'" on} 27.1.1998 I for
Rs.4,O8{eao[4e_ and edaiemondh was sold to
M/s.Sheetar=Erporte;rSnrath for Rs.4,21,250/~, a
copy Vof the dban§>,nées book was filed on
"29.1ir§[email protected] It' was" also contended that the
Vaseeéseeg had 'filed a declaration under the
Voluntary fiecieration of Income Scheme 1997 on
Vflz 23.12Dl?§? tender Section 68(2) of the said
t*'$§heme_ dfhereinafter called 'Scheme 1997),
:eherein she had declared the income in the form
V%%
of gold jewellery and diamond for the value of
Rs.3,51,213f- in respect of assessment years
1987-88 and the report of the valuation of theda
jewellery and ornaments was also filed;1 :f:ae{T~f~
said application was accepted and a certificate _
had been issued on 27.12.19§?' ay.}va1gih§ ltheévce
said gold and diamond by indexedafiethodeghd_the
aame has been declared in the retarn of lhcome
filed on 16.10.1998.' The éaaéaélaa authority by
order dated 30.3.2001 held that.theaaaaessee had
failed to prove *the transactiohmzof sale to
M/s.Mahalaxmi*aaHdeeellers_ ~ for amount of
Rs.4,0s,Ga0i-- 'ahd?,thetaSale of diamond for
Rs.4,21{25Of¥Vdtor--Mfs}$hettal Exports, Surat.
' fiavifié regard to the statements recorded by him
hand» after" cohaidering the contentions of the
assesaee, the assessing authority also held the
sale proeeeds as income and charged the enitre
'd*'¢§ea¢:. of Rs.4,08,080f* and Rs.4,21,250/- as
_lncofie from other sources under Section 68 and
\3-?*
deduction was given to the amount that 'was
declared under the declaration filed under their,
scheme 199? towards gold jewellery and diaeend.3
Being aggrieved by the said order passed he the 7
assessing authority, an appeal was filed beforea '
the Commissioner of Incomeftax feppealsfirfififlbli
by the assessee.
3. In the_r*-3§=_1id;EiP1i'<éé§.1V"t.?3§"'.ordger".passed by
the aS$essin§: %fi%pgrit§2 wee igefiffirmed, however
it was ordered fhat the.eeeeeeing officer will
treat the ehtire aeoeht cf fie.8,29,330/- as the
ificomg V,/t" Vtherlgaefiellaht therein. Being
aggrieved hf the said order dated 27.3.2003 an
l"eppeel';waex preferred before the Income-tax
dflppellateifrihnal. The Tribunal by order dated
19}12I2003ht¢ohfirmed the order passed by the
'Commieeioner of Income--tax (appeals) and
udddiémissed the appeal. Being aggrieved kgr the
. said" order passed by the Income-tax appellate
U-9'
is submitted that the gold jewellery and 'the
diamond that are subject matter of sale and ere '_
the gold jewellery and the diamond whioh "had 'h
been declared under the rfioheme t l9Q7h, ahd<H"
wherefore, the question of treatihg lthe, sald.i'
transaction as a sale under Section 68 apg§§,fld£
arise. The learned Counsel aleo_sgbmits-that the
property sold has vbeeh_ shewa Vie: the regular
returns, as per the amohntyreoeiyedhhy way of
sale and ihdeeihg_liH,Freepeoti"of the same
properties §_whiehlK'wehezllsuh§eot matter of
applicatioh filed Qpder the éégeme 1997 does not
arise. iTherefore{zhegSebmits that the finding
of the Tribnnal_ confirming the order of the
"*firstd: a§pellate'~ authority' who inturn had
Vdeonfirmed vthe" order passed by the assessing
aethorith is liable to be eet aside.
lrAȤ. fin the other hand, the learned Counsel
ifor the respondent revenue submitted that what
\<je..;'*:'~
appellate authority and the Tribunal. Hating
regard to the above said facts as the §ro§ert§4e.
that is sold under the transaction as éxpi§1fiea'#
by the assesses is not the "oroperty'gthat_.was Vi
declared for assessment under; the Soheme.=l§§7aii
the order of assessment oasseo $9 the assessing
authority that has been oenfimrea in appeal by
the first appellate asthorigy/ ans ghe Tribunal
is justified and does not Ca}l for interference
in this appeai.«}*t .t
7g We_haVe siven anxious consideration to
the contentions of the learned Counsel for the
parties, Efiafiing ireeard to the contentions
J"advaneedgbywthe'learhed Counsel for the parties,
lthe&Tsabstantiai questions of law that would
arise for oar fletermination in this appeal are,
i;.. Whether the finding of the Income-Tax
xiihpoellate Tribunal that the sale transaction as
,re§eé1éa in the regular returns filed are
W 4
I0
taxable under Section 68 of the Income~tax fict;
is perverse cut arbitrary for run: ccnsideratice.ix
of the material fact, as to whether the gcocs"
that are sold under the transactions relieéeugchi i
by the assesse are the same gocdé which had.beehRv
declared under the apclicatiog.Wfil§§"f§fider
Veluntary Declaratiop. of ,:§¢nme_ Scheme ui997,
which was accepted bf"the.reiehae§iRi*
2) What order? aW"t°'V M
8. w;_ g$§§Qé:4ih£h§i"'aa§§e substantial
questioha'cf'iawHaa¢feiicy3:twi
1) in the atfiihatifiei
2} As her théxfihai order for the following
. . . . .
"i9; Pciht7hos.1 and 2: We have been taken
through. theh application filed by the assessee
ihitfin§er=ithes Scheme 1997 as also the certificate
iieauefifj by the revenue accepting the said
.'\SJ\/g}
11
application. We have also been taken throuéh
the order passed by the asseesing authrotiyiji"
first appellate authority and the Tribnhai*caei'h
also the report of valuation 'of"«jeQelleryt and:iV
oranaments filed along withihtheliapplicatiohpl'
filed under the Scheme l9§7 as aleo the cofitente
of the documents as annexures to this appeal}
10. It is.eclear~~fromVithesioerheal of the
material on_'§ée§§§ _thatixha§jhaiiregard to the
peculiar factsieha citgefletaficee of the case and
the abotelTSeidwieete§ial_roe' record and the
contentionevof the reaeective parties, the fact
that the aeseeseeifihad filed an application
"claimihg benefit under the Scheme 1997 declaring
igold"§eweller§Fand diamond which was valued at
Rs;3;51,2l$?f}f which has been accepted by the
revenfie fly issuing a certificate on 27.12.1997,
hlecannot be disputed. It is also clear from the
lperfieal of the material on record that the
\9t?=
12
assessee has effectefi sale transactibfis§fiin;.'
respect ef gold fiewellery and diamendgi as
claimed in the regular returns frreag ia net ;h,_f
dispute. However, the real qaeetionj_fhat«'was"
required to be decided by Qthe tiratVapee#iate
authority and the afiefissifiéwa§the£itYhWas"as to
whether the subjeeth 'matteri:fldfi "ethe sale
transaction ia_rnrrea§eet$of"theVgoeaa that were
subject matter_ er; deQiaratiee'Vfried under the
Scheme vHl9§?;tffyhraht:hdeeiaration has been
a&mittealy_--aeeepted rhfv the revenue. If the
assessee tie able :to f§fa§e that what is sold
under *the uaa;a" transaction ciaimed by the
aaseasee in the regular return filed pertains to
'the_rgoiéL"5efieilery and diamond which was
deelared Mifir the application filed under the
V*«_ Scheme~§§§7, the contention of the asseaaee that
"=t what "is sold unaer the eaie transaction and
*aa¢;ared under the regular returns is the geld
urjeeellery and aiamond that was subject matter of
$57
13
applicaticn filed under the Scheme 199?» and,
cannot be taxed under Section 68 hasiWtc5fhe*,i.
accepted. However, if the assessee_is~sct"ableVd
to prove that the subject matte; cf ::épsa¢t:§s,_
declared in the regula:rareturns* is cfihe tsahei
goods which. is declared uusder thé_'ap§lication
filed under Scheme" 1997/ afidi accepted Aby the
revenue, then it is cleaf that the assesses is
bound to pay tax oh the saie,transacticns, as
what is scld is~@ct the fificpegty which is the
subject hatter Sf afifiiicaticu under the Scheme
1997. '1ThisV pfcc0sitiQu,.cannot be disputed by
the Counsel for the parties. When the finding
--m_givefi,:fiy Rthe"<assessing authority, which is
i"iccfifirmedfbf*the first appellate authority and
the gTribuhaij in appeal is considered, it is
Clea? that there is no specific finding an this
iyfiateriai fact, which would decide the contenticn
W.of":he assassee or the revenue. Depending upcn
iR'~£he finding that may be given by the assessing
W5'
14
authority; the assessee is bound to pay .tax
under Section 68, if the assessee has not baa; V
able to prove that the goods that are soio gnaef-""*
the transaction declared under' the iréguiax.'
returns are the goods which 'aer¢ "declared _asd,"'
accepted under the application fiied fiaaar the
Scheme 1997. If the' assesseh is, abie~_to hrove
that the goods that' 'areoi"soio"__under the
transaction deciared ifi the iegnlar returns are
the goods which were deicarefi in the application
filed under the scheméfiae? aha accepted by the
revenuef iiii "thehu Egg hqfiestioni of taxing the
transaction deciarea ih the regular return under
Section 68'°wou1d gnot 'arise and tax has to be
-imposeo ahder Section 45 of the Incomemtax Act,
h*196i;._ ,$incei>this material fact has not been
consioeredijbyk the assessing authority or the
it firatV appeliate authority or the appeilate
'4"3 ?ribunal; it is clear that the finding given by
itheilnoomewtax Appellate Tribunal confirming the
\s=J> a
16
ORDER
The appeal is allowed. The order passes b§sr} the Encome~tax Appellate Tribunal, 8afiQalere"ic Bench 'C' in :TA.No.605/Banga:gze;éé637j fer} ' assessment year 1998-99 confirmifig7 the" ;;aet_ 7"
passed by the Commissioner of Iscdmeetsssfiubii dated 27.3.2003 who inturs:issd,\csfifirsedVfithe order passed by the i§Ssesssisgxrdffieer,H %ard~ 1(3), Hubli dates 3o.3,2¢Q1 is set asiaé and the matter is remirree: rs irfie iiseeme:gax Officer, Ward-I{3), ifiuhiig ifs: ifisssingssfresh orders in the light ef {he ebserfiations made in the body of the or6er}_ fidbfiu Turin;
55/9 Ituigpé gds