Sri Sharath, Bangalore V. ACIT, Bangalore

ITA 1149/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5370 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-04-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 03-12-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: CHANDRASHEKAR
• Keywords: Search and seizure; Opportunity of being heard; Principle of natural justice; Source of fund
• Section: 234B; 132; 144

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH A BEFORE DR. O.K NARAYANAN, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.1149/BANG/2009 (A SST. YEAR -2005-06) SRI SHARATH, L/R OF LATE SRI A.N RANGASWAMY, NO.64, HOSPITAL ROAD, BALEPET ROAD CROSS, BANGALORE. . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 1(2), BANGALORE. . RESPONDENT APPELLANT BY : SHRI CHANDRASHEKAR, ADVOCATE RESPONDENT BY : SMT. JACINTA ZIMIK VASHAI, ADDL. COMMISSIONER OF INCOME-TAX O R D E R PER DR. O.K NARAYANAN, VICE PRESIDENT THIS APPEAL IS FILED BY THE ASSESSEE. THE RELEVAN T ASSESSMENT YEAR IS 2005-06. THE APPEAL IS DIRECTED AGAINST TH E ORDER PASSED BY ITA NO.1149/B/09 2 THE CIT(A) VI AT BANGALORE DATED 22/9/2009 AND AR ISES OUT OF THE ASSESSMENT COMPLETED U/S 144 OF THE INCOME-TAX ACT 1961. 2. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEA L READ AS UNDER: (I) THE CIT(A) FAILED TO APPRECIATE THAT THE ASSESSMENT ORDER PASSED U/S 144 OF THE ACT, WITHOUT GIVING THE APPELLANT A REASONABLE OPPORTUNITY OF BEING HEARD IS BAD IN LAW AS THE SAME IS AGAINST TH E PRINCIPLES OF NATURAL JUSTICE AND THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. (II) THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACT THAT THE MERCHANTS SOCIAL CLUB (BLUES CLUB) WAS A REGISTERED SOCIETY AND THE INCOME OF THE CLUB CANNOT BE ASSESSED IN THE HANDS OF THE APPELLANT, UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. (III) WITHOUT PREJUDICE TO THE ABOVE THE LEARNED CIT(A) IS NOT JUSTIFIED IN LAW IN ESTIMATIN G THE INCOME OF THE APPELLANT FROM MERCHANTS SOCIAL CLUB (BLUES CLUB) AT RS.54,00,000/- UNDER THE FACT S AND CIRCUMSTANCES OF THE CASE. ITA NO.1149/B/09 3 (IV) THE AUTHORITIES BELOW ERRED IN NOT APPRECIATING THE FACT THAT THE CARD ROOM ACTIVITIES WAS COMPLETELY CLOSED ON 4.7.2003 SOON AFTER THE ACTION OF SEARCH AND SEIZURE U/S 132 OF THE ACT TOO K PLACE IN THE PREMISES OF THE APPELLANT UNDER THE FA CTS AND CIRCUMSTANCES OF THE CASE. (III) WITHOUT PREJUDICE THE AUTHORITIES BELOW ARE NOT JUSTIFIED IN ADDING A SUM OF RS.1,12,795/- AS INCOME FROM CARD ROOM UNDER THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE. (IV) THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT THE ASSESSMENT PROCEEDINGS FOR ONE ASSESSMENT YEAR IS INDEPENDENT ONE TO THAT OF THE OTHER ASSESSMENT YEARS AND FURTHER FAILED TO APPRECIATE THE FACT THAT THE PRINCIPLES OF RES JUDI CATA IS NOT APPLICABLE UNDER THE INCOME-TAX ACT, 1961. (V) THE LEARNED AUTHORITIES ARE NOT JUSTIFIED IN IMPOSING INTEREST U/S 234A AND 234B OF THE ACT A S THE SAID INTEREST IS PENAL IN CHARACTER AND IS COMPENSATORY IN NATURE. AS THE APPELLANT HAS NOT BEEN HEARD AT THE TIME OF IMPOSITION OF INTEREST TH E SAME IS OPPOSED TO THE PRINCIPLES OF NATURAL JUSTIC E. ITA NO.1149/B/09 4 3. WE HEARD BOTH THE SIDES IN DETAIL. THE ESTIMATI ON OF INCOME IN THIS CASE WAS MADE ON THE BASIS OF THE DETAILS COLL ECTED IN AN EARLIER SEARCH AND THE CONSEQUENT ASSESSMENT MADE FOR THE EARLIER ASSESSMENT YEAR. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WAS CONSTRAINED TO COMPLETE THE ASSESSMENT U/S 144 FOR WANT OF CONSTRUCTIVE SUPPORT FROM THE ASSESSEE IN FILING TH E DETAILS AND PARTICULARS AND PROVING HIS CASE OTHERWISE. 4. AS FAR AS EARLIER ASSESSMENT YEAR IS CONCERNED, THE SEARCH HAS BROUGHT OUT SEIZURE OF CASH IN THE CLUB WHICH THROW S LIGHT IN THE ACTIVITIES OF THE ASSESSEE AND IT WAS ON THE BASIS OF THOSE MATERIALS, THE INCOME WAS ESTIMATED. THE ASSESSING OFFICER HAS VA LIDLY MADE A FINDING ON THE BASIS OF THE MATERIALS COLLECTED IN THE COURSE OF SEARCH THAT THE CARD ROOM ACTIVITY CARRIED OUT IN A MERCHA NTS SOCIAL CLUB IS AN ACTIVITY REGULARLY CARRIED OUT BY THE ASSESSEE A ND ONE OF HIS REGULAR SOURCES OF INCOME. IN SUCH CIRCUMSTANCES, WE FIND THAT THERE IS NOTHING WRONG TO TAKE INTO CONSIDERATION, THE SAID PARTICULAR SOURCE OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR AS WELL. W HEN THAT SOURCE OF INCOME IS RIGHTLY ADOPTED BY THE ASSESSING OFFIC ER, THE ONLY QUESTION LEFT OUT IS THE ESTIMATE OF QUANTUM. THE QUANTUM AS MODIFIED BY THE CIT(A) IS FAIR AND REASONABLE. ITA NO.1149/B/09 5 5. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). IN RESULT, THE APPEAL FILED BY THE ASSESSEE IS DI SMISSED. ORDER PRONOUNCED ON MONDAY , THE 26TH DAY OF APRIL, 2010, AT BANGALORE. SD/- SD/- (GEORGE GEORGE K) (DR. O.K NARAYANAN ) JUDICIAL MEMBER V ICE PRESIDENT VMS. COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF 7..GF, ITAT, NEW DELHI. BY ORDER ASST. REGISTRAR, ITAT, BANGALOR E.