Shri S. Jaganathan, Erode V. DCIT, Bangalore

ITA 68/BANG/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9504 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-09-2009
• Assessment Year: 1995-1996
• Appeal Filed On: 23-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWATHI S PATIL
• Assessee Lawyers: S SRIDHAR
• Keywords: Gift; Opportunity of being heard; Block assessment
• Section: 143(3); 133A; 260A; 132

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI GEORGE GEORGE. K, JUDICIAL MEMBER AND SHRI A MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.68 & 94(BANG)/2009 (ASSESSMENT YEAR:1995-96) (1)SHRI S. JAGANATHAN (ITA NO.68/09) L/R OF LATE A.S SENGODA GOUNDER, NO.6, BRIDGE ROAD, PALLIPALAYAM, ERODE-638 006. AND (2) A SHANMUGASUNDARAM(ITA NO.94/09) NO.5/60, BRIDGE ROAD, PALLIPALAYAM, ERODE-638 006. .. APPELLANTS VS. DY. COMMISSIONER OF INCOME-TAX, CIRCLE-1(1), BANGALORE. .... RESPONDENT APPELLANT BY : SHRI S SRIDHAR RESPONDENT BY : SMT. SWATHI S PATIL O R D E R PER GEORGE GEORGE K, JUDICIAL MEMBER : THESE APPEALS ARE DIRECTED AGAINST SEPARATE ORDERS OF COMMISSIONER OF INCOME-TAX (APPEALS) VI, BANGALOR E BOTH DATED 8/12/2008. THE ASST. YEAR CONCERNED FOR BOTH THE APPEALS ARE 1995-96. 2. THE ASSESSEE IN ITA NO.68/09 IS THE SON OF LATE A.S SENGODA GOUNDER AND ASSESSEE IN ITA NO.94/09 BELONG S TO S.G GROUP. SINCE COMMON ISSUES ARE INVOLVED IN BOTH TH ESE APPEALS, ITA 68 & 94/B/2009 PAGE 2 OF 5 THEY HAVE BEEN HEARD AND DISPOSED OF TOGETHER FOR T HE SAKE OF CONVENIENCE AND BREVITY. 3. FACTS IN BOTH THE APPEALS ARE SAME, EXCEPT FOR V ARIATION IN FIGURES. IT WAS SUBMITTED THAT EVEN DATES OF PASSI NG OF VARIOUS ORDER IN BOTH THESE APPEALS ARE IDENTICAL. HENCE, FACTS IN RELATION TO ITA NO.68/09, IS NARRATED HEREUNDER: 4. A SURVEY U/S 133A OF THE INCOME-TAX ACT WAS COND UCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 8.9.96. T HE ASSESSEE IN THE COURSE OF SURVEY REVEALED THAT HE HAD RECEIVED NRI GIFTS AMOUNTING TO RS.1,51,28,998/-. ON 20.2.97 SEARCH U /S 132 WAS CONDUCTED ON THE ASSESSEES PREMISES. ORDER U/S 143 (3) OF INCOME-TAX ACT FOR THE ASST. YEAR 1995-96 WAS PASSE D ON 31.03.98 CONSIDERING THE NRI GIFTS AS ASSESSEES IN COME. 5. ON APPEAL, THE LEARNED CIT(A) DELETED THE ENTIRE ADDITION ON THE GROUND THAT SUCH GIFTS SHOULD BE CONSIDERED IN THE BLOCK ASSESSMENT PASSED U/S 158BC OF THE INCOME-TAX ACT F OR THE BLOCK PERIOD 1-4-87 TO 20/2/97. ON APPEAL, THE HONBLE TRIBUNAL CONFIRMED THE ADDITION MADE IN THE ASSESSMENT PASSE D U/S 143(3) OF THE INCOME-TAX ACT AND DELETED THE ADDITIONS MAD E IN THE BLOCK ASSESSMENT. THE HONBLE TRIBUNAL WAS OF THE VIEW T HAT UNDISCLOSED INCOME/GIFTS CAME OUT AS A RESULT OF SU RVEY AND NOT OUT OF SEARCH. A MISC. PETITION DATED 10.11.02 FIL ED BY THE ASSESSEE WAS ALSO DISMISSED BY THE HONBLE TRIBUNAL . HOWEVER, ON FURTHER MISC. PETITION DATED 30/7/05, THE HONBL E TRIBUNAL SET ITA 68 & 94/B/2009 PAGE 3 OF 5 ASIDE THE ASSESSMENT TO THE FILE OF THE AO FOR THE REASONS THAT RELEVANT DOCUMENTS RELATING TO THE ALLEGED GIFTS WE RE NOT CONSIDERED BY THE AO. THE HONBLE TRIBUNAL DIRECTED THE AO TO CONSIDER ALL SUCH DOCUMENTS AND PASS FRESH ORDER AF TER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. PURSUANT TO THE TRIBUNALS ORDER, THE AO PASSED FRESH ASSESSMENT ORDER ON 29.12.06, WHEREIN NRI GIFTS WER E TREATED AS UNEXPLAINED AND SAME WAS ADDED TO THE TOTAL INCOME. ON FURTHER APPEAL, THE LEARNED CIT(A) CONFIRMED THE ACTION OF THE AO. THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE VERY OUT SET POINTED OUT THAT AS AGAINST THE CANCELLATION OF BLO CK ASST. BY THE TRIBUNAL, THE REVENUE HAD PREFERRED AN APPEAL TO TH E HONBLE HIGH COURT U/S 260A OF THE ACT AND THE SAME IS NOW PENDI NG BEFORE THE HONBLE HIGH COURT IN ITA NO.1029/06. IT WAS FURT HER SUBMITTED BY THE LEARNED COUNSEL AS AGAINST THE REGULAR ASSES SMENT, WHICH WAS PROTECTIVELY ASSESSED, THE ASSESSEE HAD FILED A N APPLICATION UNDER KAR VIVAD SAMADHAN SCHEME-98 (KVSS), WHICH WA S DISMISSED BY THE COMMISSIONER. 8. AS AGAINST THE COMMISSIONERS ACTION IN NOT ENTE RTAINING THE APPLICATION UNDER KVSS, ASSESSEE HAD FILED WRIT PETITION. THE LEARNED SINGLED JUDGE DISMISSED THE ASSESSEES WRIT PETITION AND ON FURTHER APPEAL, THE DIVISION BENCH OF THE HONBL E HIGH COURT PASSED JUDGMENT ON 3.7.09. A COPY OF JUDGMENT IS P LACED ON ITA 68 & 94/B/2009 PAGE 4 OF 5 RECORD. THE RELEVANT PORTION OF HONBLE HIGH COUR T JUDGMENT IS REPRODUCED BELOW : THE ABOVE APPEAL IS DISPOSED OF WITHOUT ANSWERING THE QUESTING OF LAW BY HOLDING THAT THE ASSESSEE/APPELLANT WOULD BE ENTITLED TO CLAIM THE BENEFIT ACCRUING UNDER KVSS ONLY IN THE EVENT OF IT A 1029/2006 PENDING BEFORE THIS COURT IS DISMISSED AN D REACHES FINALITY, IN AS MUCH AS THE PROTECTIVE ASSESSMENT ORDERS PASSED ON 31.3.98 AND DEMAND RAISED THERE UNDER WOULD GET REVIVED. IN SUCH AN EVENT THE DESIGNATED AUTHORITY WOULD CONSIDER THE DECLARATIONS FILED BY THE APPELLANTS UNDER SECTION 88 OF THE FINANCE ACT DATED 22-12-1998 ANNEXURE C AN D H RESPECTIVELY IN ACCORDANCE WITH LAW SUBJECT TO THE ASSESSEES SATISFYING ALL OTHER CONDITIONS UNDER TH E SCHEME. IT IS ALSO MADE CLEAR THAT, IN THE EVENT T HE REVENUE SUCCEEDS IN THE APPEAL I.E, ITA 1029/2006, THE QUESTION OF CONSIDERING THE DECLARATION DATED 2 2- 12-1998 AS PER ANNEXURE-C AND H WOULD NOT ARISE . 9. THE LEARNED COUNSEL SUBMITTED IN VIEW OF THE PEN DENCY OF APPEAL (ITA NO.1029/06) BEFORE THE HONBLE HIGH COU RT, THE MATTER NEED TO BE REMITTED BACK TO THE FILE OF THE AO. IT WAS SUBMITTED NO DECISION ON MERITS COULD ENTERTAINED U NLESS A JUDGMENT IS RENDERED BY HONBLE HIGH COURT IN ITA N O.1029/06. THE LEARNED DR ON THE OTHER HAND DID NOT RAISE ANY SPECIFIC OBJECTION FOR REMITTING THE MATTER BACK TO THE FILE OF THE AO. 10. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE ARE OF THE VIEW THAT IN THE EVENT T HE HONBLE HIGH ITA 68 & 94/B/2009 PAGE 5 OF 5 COURT REJECTS THE APPEAL ON BLOCK ASST., THEN ASST. MADE U/S 143(3) DATED 31.3.98 WOULD BE THE EFFECTIVE ORDER A ND DEPARTMENT MAY HAVE TO TAKE NECESSARY ACTION AFTER FOLLOWING T HE DIRECTION OF THE HONBLE HIGH COURT TO ENTERTAIN THE KVSS APPLIC ATION. IN SUCH AN EVENTUALITY, THE ISSUE ON MERITS ARISING IN APPE AL WOULD BECOME INFRUCTUOUS. ON THE OTHER HAND, IF THE HONBLE HIG H COURT UPHOLD THE BLOCK ASST., THEN THE ORDER PASSED U/S 143(3) A ND SUBSEQUENT MODIFIED ORDER OF IT WOULD BECOME NULL AND VOID. T HEREFORE, WE ARE OF THE VIEW THAT THIS MATTER IS TO BE REMITTED BACK TO THE FILE OF THE AO AND HE SHALL TAKE APPROPRIATE DECISION AFTER HONBLE HIGH COURT PASSES JUDGMENT IN ITA NO.1029/06. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEES A RE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11TH SEPT , 2009. SD/- SD/- (A MOHAN ALANKAMONY) (GEORGE GEORG K) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE: D A T E D : 11TH SEPT, 2009. VMS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A), BANGALORE. 5 DR, ITAT, BANGALORE. 6 GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRA R, ITAT, BANGALORE.