Dr. Mrs Bandana Mehrotra, Lucknow V. ACIT-2(1), Lucknow

ITA 1326/LKW/1997

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5694 (ITAT-LUCKNOW)
• Duration Of Justice: 16 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-01-2014
• Assessment Year: misc
• Appeal Filed On: 17-10-1997
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K GARG SHRI P K KAPOOR
• Keywords: Peak credit; Assessment record; Block assessment
• Section: 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.1326/ALLD/97 BLOCK PERIOD:1986 TO 1996 DR. (MRS.) BANDANA MEHROTRA, B - 171, NIRALA NAGAR, LUCKNOW. VS. A.C.I.T., CIRCLE - 2(1), LUCKNOW. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI S. K. GARG, ADVOCATE SHRI P. K. KAPOOR, C.A. RESPONDENT BY SHRI MANOJ KUMAR GUPTA, CIT, D.R. DATE OF HEARING 2 9/01/2014 DATE OF PRONOUNCEMENT 2 8 /02/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE BLOCK ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 158BC OF THE ACT ON 22/09/97 FOR BLOCK PERIOD FROM 01/04/86 TO 25/09/96. 2. GROUND NO. 1, AS PER MODIFIED/ CONCISE GROUNDS OF APPEAL, IS AS UNDER: 1. BECAUSE, INDIVIDUALLY SPEAKING, THE APPELLANT CANNOT BE HELD TO BE THE PERSON SUBJECTED TO SEARCH U/S 132(1) AND CONSEQUENTLY THE BLOCK ASSESSMENT ORDER DATED 22/09/1997 AS PASSED IN HER CASE BY THE LEARNED ACIT, INV. CIRCLE - 2(1), LUCKNOW IS VOID AB INITIO. 3. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT SATISFACTION WAS NOT RECORDED IN THE CASE OF THE ASSESSEE AND, THEREFORE, THE SEARCH CARRIED ON ITSELF IS NOT VALID AND AS A CONSEQUENCE, THE IMPUGNED BLOCK ASSESSMENT ORDER 2 IS ALSO NOT VALID. HE PLACED RELIANCE ON A JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CA SE OF AJIT JAIN VS UNION OF INDIA [2000] 242 ITR 302 (DEL) . 4. THE LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, GONE THROUGH THE ASSESSMENT ORDER AND THE JUDGMENT OF HON'BLE DELHI HIGH COURT CITED BY LEARNED A.R. OF THE ASSESSEE. WE FIND THAT IT IS NOTED BY THE ASSESSING OFFICER IN ASSESSMENT ORDER THAT THE ASSESSEE IS A MEDICAL PRACTITIONER HAVING A PATHOLOGY CLINIC AT B - 171, NIRALA NAGAR, LUCKNOW WHERE SHE LIVES WITH HER HUSBAND DR. SANJAI MEHROTRA AND HER FATHER - IN - LAW DR. R.M.L. MEHROTRA. HE HAS ALSO NOTED THAT OTHER TWO PERSONS ARE ALSO CARRYING ON THEIR PRIVATE PRACTICE AT THE SAME PLACE AND ON 25/09/96, THE BUSINESS CUM RESIDENTIAL PREMISES OF THESE PERSONS WERE SEARCHED U/ S 132 OF THE I.T. ACT. THEREAFTER, HE HAS NOTED THAT A NOTICE U/S 158BC WAS ISSUED ON 29/11/96 REQUIRING THE ASSESSEE TO FURNISH RETURN OF INCOME INCLUDING UNDISCLOSED INCOME FOR THE BLOCK PERIOD. HENCE, WE FIND THAT A CATEGORICAL FINDING IS GIVEN BY THE ASSESSING OFFICER THAT THE SEARCH WAS CARRIED OUT IN THE CASE OF THE ASSESSEE ALONG WITH HIS TWO RELATIVES WHO WERE ALSO RESIDING AND PRACTICING ON THE SAME ADDRESS. NOW IN THE LIGHT OF THESE FACTS, WE EXAMINE THE APPLICABILITY OF THE JUDGMENT OF HON'BLE DELHI HIGH COURT CITED BY LEARNED A.R. OF THE ASSESSEE. WE FIND THAT IN THIS CASE , THE ASSESSEE HAD FILED THE WRIT PETITION BEFORE HON'BLE DELHI HIGH COURT UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA CHALLENGING THE LEGALITY AND VALIDITY OF THE AUTHOR IZATION DATED 11/01/96 ISSUED BY DIRECTOR OF INCOME - TAX (INV.) U/S 132(1) OF THE ACT AND THE SUBSEQUENT CONDUCTING OF SEARCH ON THE SAME DATE AND FINALLY THE BLOCK ASSESSMENT ORDER. IT IS A SETTLED POSITION OF LAW BY NOW THAT I.T.A.T. IS NOT COMPETENT TO EXAMINE AND DECIDE THE VALIDITY OF SEARCH AND THEREFORE, THIS JUDGMENT OF 3 HON'BLE DELHI HIGH COURT DOES NOT RENDER ANY HELP TO THE ASSESSEE. REGARDING THE CONTENTION OF THE ASSESSEE THAT THE SATISFACTION WAS NOT RECORDED IN THE INDIVIDUAL CASE OF THE ASSE SSEE, WE FIND THAT NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE IN SUPPORT OF THIS CONTENTION AND HENCE, SUCH CONTENTIONS ARE LIABLE TO BE REJECTED AND WE DO SO. WE ALSO FIND THAT A COPY OF PANCHNAMA IS AVAILABLE ON PAGES 12 TO 15 OF THE PA PER BOOK AND THIS PANCHNAMA IS IN THE JOINT NAME OF DR. R.M.L. MEHROTRA, DR. SANJAY MEHROTRA AND DR. (SMT.) BANDANA MEHROTRA I.E. THE PRESENT ASSESSEE. IT IS BY NOW SETTLED POSITION OF LAW THAT JOINT PANCHNAMA IS ALSO VALID. WE ALSO FIND THAT THE ASSESSE E HAS FURNISHED A COPY OF THE I.T.A.T. ORDER IN THE CASE OF DR. R.M.L. MEHROTRA AND DR. SANJAY MEHROTRA IN I.T.A. NO.1327 & 1325/ALLD//97 DATED 29/05/98, COPY OF WHICH IS AVAILABLE ON PAGES 116 TO 142 OF THE PAPER BOOK. THIS I.T.A.T. ORDER IS IN RESPECT O F THE SAME SEARCH CARRIED OUT ON 25/09/96 AND AS PER THIS TRIBUNAL ORDER, IT WAS HELD THAT, UNDISCLOSED INCOME, AS PER THE BLOCK ASSESSMENT FRAMED IN THOSE TWO CASES IS LIABLE TO BE TAXED ALTHOUGH IT IS A REDUCED AMOUNT. HENCE, IT CAN BE INFERRED THAT THE SEARCH WAS HELD TO BE VALID IN THOSE TWO CASES AND THEREFORE, IN THE PRESENT CASE, THE ARGUMENT OF THE ASSESSEE HAS NO FORCE AND THEREFORE, THE SAME IS REJECTED AND GROUND NO. 1 OF THE ASSESSEES APPEAL IS REJECTED. 6. GROUND NOS. 2, 3 & 4 ARE INTER - CONNECTED, WHICH READ AS UNDER: 2. BECAUSE THE COMPUTATION OF UNDISCLOSED INCOME AT RS.10,88,029/ - MADE UP OF: (A) RS.3,90,529 ON THE BASIS OF NOTE BOOK (CHAMPION) FOUND AND SEIZED VIDE SL.NO.23 OF ANNEXURE - B - 1/PAGE 3 PREPARED IN THE NAME OF DR. R.M.L. MEHROTRA (M/S MEHROTRA PATHOLOGY). (B) RS.65,500 INVESTMENT IN KVPS IN THE NAME OF TWO MINOR CHILDREN OF THE APPELLANT, ON THE BASIS OF INFORMATION GOT OBTAINED FROM THE 4 RETURNS OF THE APPELLANT AS WERE AVAILABLE ON THE ASSESSMENT RECORDS OF PRE - SEARCH PERIOD. (C) RS.6,32,000/ - ON THE BASIS OF INTAS DIARY FOUND AND SEIZED VIDE SL.NO.25 OF ANNEXURE - B (PAGE3) PREPARED IN THE NAME OF MEHROTRA PATHOLOGY PROP. DR. R.M.L. MEHROTRA, B - 171, NIRALA NAGAR, LUCKNOW. IS WHOLLY ILLEGAL AS BEING INCONSISTENT WITH THE PROVISIONS OF CHAPTER XIV - B, UNDER WHICH THE BLOCK ASSESSMENT ORDER DATED 22/09/1997 HAD BEEN MADE. 3. BECAUSE IN ANY CASE AND WHOLLY WITHOUT PREJUDICE TO THE CONTENTION RAISED IN THE FOREGOING GROUNDS: (A) THE WORKING OF UNDISCLOSED INCOME AT RS.3,90,529/ - (ON THE BASIS OF SEIZURE OF B - 1/23 ((SUPRA)) IS WHOLLY ERRONEOUS AND EXCESSIVE; (B) ON A DUE CONSIDERATION OF THE EXPLANATION GIVEN BY THE APPELLANT, DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS, THE INVESTMENT IN NSCS AGGREGATING RS.65,500 / - FALLING IN DIFFERENT YEARS COULD NOT HAVE BEEN TREATED TO HAVE REMAINED UNEXPLAINED; AND (C) QUANTUM OF ADDITION OF RS.6,32,000/ - ON THE BASIS OF BROWN DIARY 1990 (INTAS) IS BASED ON MISREADING/MISINTERPRETATION OF VARIOUS FIGURES AS APPEARING IN THE SAI D DIARY; 4. BECAUSE OVERALL EFFECT OF VARIOUS NOTINGS APPEARING IN THE SAID DIARY COULD NOT HAVE EXCEEDED A SUM OF RS.2,00,000/ - AND THE SAME IS FULLY COVERED BY THE FAMILY KITTY AND AVAILABILITY OF FUNDS THEREIN AND CONSEQUENTLY THE ADDITION OF RS.6,32,0 00/ - STAND WHOLLY VITIATED. 7. REGARDING THE FIRST ITEM OF ADDITION OF RS.3,90,529/ - , IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE SHOULD BE DECIDED IN LINE WITH THE TRIBUNAL DECISION IN THE CASE OF THE REMAINING TWO PERSONS I.E. DR. R.M.L. MEHROTRA AND DR. SANJAY MEHROTRA FOR THE SAME SEARCH AS PER I.T.A. NO.1327 & 1325/ALL/97. HE DRAWN OUR ATTENTION TO PAGE NO. 140 OF THE PAPER BOOK CONTAINING THE PARA 27 OF THE TRIBUNAL DECISION WHERE IT WAS HELD THAT THAT THE 5 AMOUNT OF RS.92,490/ - IS TO BE TAXED IN THE HANDS OF DOCTOR TRIO IN THE SAME RATIO IN WHICH THE INDIVIDUAL RECEIPT BORE TO THE TOTAL RECEIPT OF THE TRIO. 8. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND FIND THAT THE ISSUE IS DECIDED BY THE TRIBUNAL IN THE CASE OF REMAINING TWO DOCTORS I.E. DR. R.M.L. MEHROTRA AND DR. SANJAY MEHROTRA BY HOLDING THAT TOTAL ADDITION TO BE MADE IN THE TRIO SHOULD BE RS.92,490/ - AN D INDIVIDUAL SHARE SHOULD BE WORKED OUT IN THE RATIO IN WHICH THE INDIVIDUAL RECEIPT BORE TO THE TOTAL RECEIPT OF TRIO. IN THE PRESENT CASE ALSO, WE DIRECT THE ASSESSING OFFICER TO COMPUTE THE INCOME OF THE ASSESSEE ON THIS ACCOUNT ON THE SAME BASIS BY AD OPTING THE SAME RATIO, WHICH THE INDIVIDUAL RECEIPTS OF THE PRESENT ASSESSEE BORE TO THE TOTAL RECEIPT OF DOCTOR TRIO AND THE TOTAL INCOME OF DOCTOR TRIO SHOULD BE RS.92,490/ - FOR WORKING OUT THE INCOME OF THE PRESENT ASSESSEE. THIS ISSUE STANDS PARTLY AL LOWED. 9.1 NOW THE SECOND ITEM OF ADDITION IN DISPUTE IS THE ADDITION OF RS.65,500/ - , WHICH IS STATED TO BE IN RESPECT OF INVESTMENT IN KVPS IN THE NAME OF TWO MINOR CHILDREN OF THE ASSESSEE BUT IN THE COURSE OF HEARING, IT WAS AGREED BY LEARNED A.R. OF T HE ASSESSEE THAT SUCH ADDITION IS NOT ON ACCOUNT OF INVESTMENT IN KVP BUT IT IS ON ACCOUNT OF INVESTMENT IN NSC AS PER PARA NO. (IIIA) ON PAGE 6 OF THE ASSESSMENT ORDER. HE TRIED TO EXPLAIN THIS INVESTMENT IN NSC AS PER THE STATEMENT OF INCOME FILED BY T HE ASSESSEE FOR ASSESSMENT YEAR 93 - 94, COPY OF WHICH IS AVAILABLE ON PAGES 101 TO 105 OF THE PAPER BOOK. H E SUBMITTED THAT ON PAGE NO. 102 OF THE PAPER BOOK , THE ASSESSEE HAS ALREADY DISCLOSED INTEREST INCOME IN RESPECT OF NSC OF RS.65,000/ - BUT AT THIS J UNCTURE , IT WAS POINTED OUT BY THE BENCH THAT SUCH 6 INCOME DECLARED BY THE ASSESSEE IN COMPUTATION OF INCOME FOR ASSESSMENT YEAR 93 - 94 IS IN RESPECT OF INCOME FROM NSCS OF RS.25,000/ - ACQUIRED IN AUGUST 86, RS.15,000/ - IN MARCH 87 AND ANOTHER RS.25,000/ - PU RCHASED IN NOV 87 WHEREAS THE ASSESSING OFFICER HAS MADE THE ADDITION IN RESPECT OF INCOME FOR THE PURCHASE OF NSC OF RS.5,000/ - IN FINANCIAL YEAR 86 - 87 AND THE REMAINING NSCS WERE PURCHASED IN FINANCIAL YEAR 88 - 89 TO 91 - 92 THEN HOW SUCH INCOME DECLARED IN ASSESSMENT YEAR 93 - 94 CAN COVER THESE INVESTMENTS IN NSCS. IN REPLY, THE LEARNED A.R. OF THE ASSESSEE HA D NOTHING TO SAY. 10. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT THE CASE OF THE ASSESSING OFFICER IS THIS THAT THE ASSESSEE HAS PURCHASED NSC OF RS.75,500/ - WHICH INCLUDED NSC OF RS.5,000/ - PURCHASED IN FINANCIAL YEAR 86 - 87 AND REMAINING RS.70,500/ - BEING NSC PU RCHASED IN FINANCIAL YEAR 88 - 89 TO 91 - 92. THE ASSESSING OFFICER HAS ALLOWED BENEFIT IN RESPECTS OF NSC ENCASHED OF RS.10,000/ - AND MADE THE BALANCE ADDITION. THESE DETAILS GO TO SHOW THAT NSCS FOR WHICH INTEREST INCOME HAS BEEN SHOWN IN ASSESSMENT YEAR 93 - 94 ARE DIFFERENT NSCS, WHICH WERE PURCHASED IN FY 86 87 & 87 88 AND THEREFORE, NO PART OF THE NSCS FOR WHICH ADDITION WAS MADE BY THE ASSESSING OFFICER, COULD BE ACCEPTED AS EXPLAINED BY THE ASSESSEE. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ASSESSMENT ORDER ON THIS ISSUE. THIS ADDITION IS UPHELD. 11.1 THE THIRD ITEM OF ADDITION IS OF RS.6,32,000/ - ON THE BASIS OF INTAS DIARY FOUND AND SEIZED VIDE SL.NO. 25 OF ANNEXURE - B. IN THIS REGARD, IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT ONLY PEAK AMOUNT SHOULD BE ADDED EVEN IF THIS CLAIM OF THE ASSE SSEE IS NOT ACCEPTED THAT THE AMOUNT WAS 7 RECEIVED FROM MOTHER - IN - LAW. HE DRAWN OUR ATTENTION TO THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER ON THIS ISSUE, WHICH IS AVAILABLE ON PAGES 60 TO 68 OF THE PAPER BOOK. 12. THE LEARNED D.R. OF THE REVENUE S UPPORTED THE ASSESSMENT ORDER. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE COPY OF THE SEIZED DIARY IS AVAILABLE ON PAGE NOS. 38 TO 42 OF THE PAPER BOOK. IN THE WRITTEN SUBMISSIONS FILED BY THE ASSESSING OFFICER, WHICH IS AVAILABLE ON PAGE NO. 60, THE CLAIM OF THE ASSESSEE IS THAT SOME OF THE AMOUNTED NOTED IN THE DIARY ARE DEPOSITS AND SOME ARE WITHDRAWAL BUT WHEN THE SEIZED DIARY IS AVAILABLE , HE COULD NOT CORRELATE ON WHAT BASIS HE IS CLAIMING THAT SOME ARE DEPOSITS AND SOME ARE WITHDRAWALS AND THE PEAK AMOUNT IS RS.2 LAC. IN FACT , THE ASSESSING OFFICER WAS WORKED OUT IN THE ASSESSMENT ORDER THAT TOTAL AMOUNT IS THE AMOUNT PAID BY THE ASSESSEE ON VARIOUS DATES AND THE TOTAL IS WORKING AT RS.6.32 LAC. THIS CLAIM WAS MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER ALSO THAT PART OF THE ENTRY ARE FOR CASH RECEIVED AND PART FOR CASH WITHDRAWAL. THE CLAIM WAS REJECTED BY THE ASSESSING OFFICER ON THIS BASIS THAT THE ENTRIES IN THE DIARIES ARE SIGNED BY MRS. SHUBHRA MALHOTRA, MRS. K. SINHA OR HER S ON SUMIT ALIAS SONU AND HE HAS OBSERVED THAT IT IS ONLY THE PERSON PAYING THE MONEY WHO NEEDS THE SIGNATURES OF THE PERSON RECEIVING THE MONEY AND NOT VICE VERSA. AGAINST ALL THE ENTRIES, SIGNATURES OF THE RECIPIENTS IS APPEARING IN THE DIARY AND, THEREFO RE, WE DO NOT FIND ANY M ERIT IN THIS CONTENTION OF THE ASSESSEE THAT PART ENTRIES ARE REGARDING PAYMENT AND PART ENTRIES ARE REGARDING RECEIPTS AND THEREFORE, PEAK HAS TO BE WORKED OUT. REGARDING THIS ARGUMENTS THAT SUM OF RS.2 LAC WAS RECEIVED BY THE ASS ESSEE FROM HER MOTHER - IN - LAW ALSO, WE DO NOT FIND ANY MERIT BECAUSE THE SAME IS NOT SUPPORTED BY ANY EVIDENCE ON RECORD. IF HER MOTHER - IN - LAW WAS HAVING SUCH AMOUNT IN CASH, THE SAME WAS REQUIRED TO BE DECLARED IN THE WEALTH TAX 8 RETURN OF THE ASSESSEES M OTHER - IN - LAW. NOTHING HAS BEEN BROUGHT ON RECORD BEFORE US TO SHOW THAT ANY WEALTH TAX RETURN WAS FILED BY THE MOTHER - IN - LAW OF THE ASSESSEE INCLUDING THE SAID CASH OF RS.2 LAC, WHICH IS CLAIMED TO HAVE BEEN GIVEN BY HER TO THE ASSESSEE. HENCE, THIS ARGU MENT IS ALSO LIABLE TO BE REJECTED. BOTH THESE ARGUMENTS ARE REJECTED I.E. RECEIPT OF CASH OF RS.2 LAC FROM MOTHER - IN - LAW AND PEAK THEORY . HENCE, WE DO NOT FIND ANY REASON TO INTERFERE IN THE ASSESSMENT ORDER ON THIS ISSUE. THIS ADDITION IS ALSO UPHELD . 14. IN THE RESULT, THE APPEAL STANDS PARTLY ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 / 02 /2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR