Smt. Seema Timir Dey Through Smt.Anita Chaturvedi, Ahmedabad V. The Dy.CIT.,Circle-14, Ahmedabad

ITSSA 1/AHD/2009

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7569 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-05-2012
• Assessment Year: misc
• Appeal Filed On: 05-01-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAHUL KUMAR
• Assessee Lawyers: ASHEEM THAKKAR
• Keywords: Invalid notice; Gift; Income from undisclosed sources
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH AHMEDABAD (BEFORE SHRI D. K. TYAGI, JM AND A. MOHAN ALANKAMON Y, AM) IT(SS)A NO.01/AHD/2009 BLOCK PERIOD: 1991-92 TO 2000-01 & UP TO 07-03-2001 SMT. SEEMA TIMIR DEY, THROUGH POA SMT. ANITA CHATURVEDI, 1, NIRANT PARK SOCIETY, PART I, NR. SUN N STEP CLUB, THALTEJ, AHMEDABAD PA NO. AARPD 3693 B VS THE D. C. I. T., CIR-4, AHMEDABAD (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ASHEEM THAKKAR, AR RESPONDENT BY SHRI RAHUL KUMAR, SR. DR DATE OF HEARING: 10-05-2012 DATE OF PRONOUNCEMENT:18-05-2012 O R D E R PER A. MOHAN ALANKAMONY: THIS APPEAL IS FILED BY THE ASSESSEE AGGRIEVED BY THE ORDER OF THE LEARNED CIT( A)-XXI, AHMEDABAD IN APPEAL NO. CIT(A)-XXI/ABD/272/07-08 DA TED 12-09- 2008, FOR THE BLOCK PERIOD 1991-92 TO 2000-01 (UP T O 07-03-2001) PASSED U/S 158BD READ WITH SECTION 158BC, 143(3) AN D 250 OF THE IT ACT. 2. THE ASSESSEE HAS RAISED FOUR GROUNDS IN HER APPE AL WHEREIN GROUND NO.4 IS GENERAL IN NATURE AND DO NOT SURVIVE FOR ADJUDICATION. IT (SS)A NO.01/AHD/2009 [B. P.: 1991-92 TO 2000-01 (UP TO 07-03-2001)] SMT. SEEMA TIMIR DEY VS DCIT, CIR-14, AHMEDABAD 2 GROUNDS NO.1, 2 AND 3 ARE REPRODUCED HEREIN UNDER F OR CONSIDERATION: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN PASSING AN ORDER U/S. 158BD RWS. 143(3) OF THE INCO ME TAX ACT, 1961 WHCIH IS ILLEGAL AND BAD IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING AN ADDITION OF RS.1,30,000/- MA DE BY THE ASSESSING OFFICER IN A.YR. 1992-93 FOR THE ALLE GED UNDISCLOSED INVESTMENT IN THE PROPERTY AT SWAGAT APARTMENT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING AN ADDITION OF RS.2,50,000/- MA DE BY THE ASSESSING OFFICER IN A. YR. 2001-02 FOR THE ALL EGED UNDISCLOSED INCOME FOR INVESTMENT MADE IN THE PROPE RTY AT SAVITA ENCLAVE, JUDGES BUNGLOW ROAD, BODAKDEV, AHMEDABAD. 3. THE ASSESSEE IS AN INDIVIDUAL FILED HER RETURN O F INCOME FOR THE BLOCK PERIOD 1991-92 TO 2000-01 AND UP TO 07-03-200 1 ON 17-11- 2006 DUE TO THE PROCEEDINGS INITIATED U/S 158 BD RE AD WITH SECTION 158BC OF THE ACT, BEYOND THE DUE DATE 07-04-2006. I NITIALLY SEARCH ACTION U/S 132 OF THE ACT WAS INITIATED AGAINST MR. DEVENDRANATH G. CHATURVEDI ON 07-03-2001.NOTICE U/S 158 BC OF THE A CT WAS ISSUED TO THE ASSESSEE AFTER RECORDING SATISFACTION IN THE FI LE OF MR. DEVENDRANATH G. CHATURVEDI. THE NOTICE U/S 158BD OF THE ACT WAS CHALLENGED BY THE ASSESSEE AND THE SAME WAS REJECTE D BY THE LEARNED AO WITH THE FOLLOWING OBSERVATIONS: AS REGARDS ASSESSEES CONTENTION THAT THE SUBMISSI ON DTD. 12.03.2001 RECORDED BY DDI DOES NOT CONSTITUTE MATE RIAL OR IT (SS)A NO.01/AHD/2009 [B. P.: 1991-92 TO 2000-01 (UP TO 07-03-2001)] SMT. SEEMA TIMIR DEY VS DCIT, CIR-14, AHMEDABAD 3 DOCUMENTS OR INITIATION OF PROCEEDINGS U/S. 158 BD, THE SAME IS NOT ACCEPTABLE BECAUSE POST SEARCH MATERIAL DO CONS TITUTE MATERIAL/EVIDENCES FOUND AS A RESULT OF SEARCH OR R EQUISITION IN VIEW OF AMENDMENT OF 158BD AND THE ONLY THING REQUI RED IS SATISFACTION OF ASSESSING OFFICER PASSING ORDER U/S . 158BC. THE A. O. PASSING THE ORDER U/S. 158BC HAS DULY RECORDE D THE SATISFACTION NOTE FOR INITIATING THE PROCEEDINGS U/ S. 158BD. 3.1 THEREAFTER, ON MERITS, THE LEARNED AO MADE AN A DDITION OF RS.1,30,000/- FOR THE INVESTMENTS MADE IN THE YEAR 1991 TOWARDS SWAGAT APARTMENT DISREGARDING THE CONTENTIONS OF TH E ASSESSEE THAT THE SOURCE OF INCOME FOR SUCH INVESTMENT WAS FROM L OAN BY HDFC BANK LTD. FOR RS.1,00,000/- AND THE REST FROM PERSO NAL SAVINGS. THE LEARNED AO FURTHER HELD THAT THE ASSESSEE WAS UNABL E TO FURNISH SOURCES FOR THE TOTAL SUM OF RS.2,50,000/- AGAINST INVESTMENTS MADE FOR THE ASSESSMENT YEAR 2001-02 (UP TO 07-03-2001). THUS, THE LEARNED AO MADE ADDITION AGGREGATING TO RS.3,80,000 /- (RS.1,30,000/- + RS.2,50,000/-). 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE FIRST APPELLATE AUTHORITY. THE ASSESSEE CHALLENGED THE VALIDITY OF NOTICE U/S 158BD OF THE ACT BEFORE THE LEARNED CIT(A). HOWEVER, THE LEA RNED CIT(A) HELD THE ISSUE AGAINST THE ASSESSEE WITH THE FOLLOWING O BSERVATIONS: AS EXTRACTED ABOVE THE ASSESSING OFFICER HAS CONSI DERED THE DETAILED SUBMISSIONS OF THE APPELLANT DATED 21.11.2 007 AND REJECTED HER CONTENTIONS HOLDING THAT THE APPELLANT ACQUIRED PROPERTIES FROM UNDISCLOSED SOURCES; THE ASSESSING OFFICER PASSING THE ORDER U/S. 158BC IN THE CASE OF THE PER SON COVERED BY REQUISITION U/S 132A, HAD RECORDED HIS SATISFACT ION ON THE BASIS OF WHICH PROCEEDINGS U/S 158BD WERE INITIATED . IT IS ALSO SEEN FROM THE SATISFACTION NOTE, COPY OF WHICH WAS GIVEN TO THE APPELLANT, THAT THE PROPERTIES AT 32, VAIBHAV BUNGA LOW, 202, IT (SS)A NO.01/AHD/2009 [B. P.: 1991-92 TO 2000-01 (UP TO 07-03-2001)] SMT. SEEMA TIMIR DEY VS DCIT, CIR-14, AHMEDABAD 4 SAVITA ENCLAVE AND GOKUL FARM, MEHSANA BELONGED TO THE APPELLANT AND THE INVESTMENT THEREIN COULD NOT BE E XPLAINED BY HER. AS THIS INVESTMENT CAME TO LIGHT ON THE REQUIS ITION PROCEEDINGS U/S 132A, ACTION U/S 158BD IN THE CASE OF THE APPELLANT WAS PROPOSED. THUS, IT IS CLEAR THAT THE INVESTMENTS SOURCES FOR WHICH WERE UNDISCLOSED WERE MADE BY THE APPELLANT CAME TO LIGHT ONLY IN THE PROCEEDINGS U/S 132A AND THE ASSESSING OFFICER DEALING WITH 158BC ASSESSMENT ORDER DULY CONVEYED THIS INFORMATION WITHIN THE MEANING O F SECTION 158BD AND THE PRESENT ASSESSING OFFICER HAD AFTER R ECORDING THE NECESSARY SATISFACTION, ISSUED NOTICE U/S 158BD DATED 06.03.2006. IN THE LIGHT OF THE ABOVE SEQUENCE OF E VENTS ALL THE LEGAL REQUIREMENTS ARE COMPLIED WITH AND THERE IS N O INFIRMITY IN THE PROCEEDINGS U/S 158BD RWS 158BC. 4.1 FURTHER ON MERITS, THE LEARNED CIT(A) UPHELD TH E ORDER OF THE LEARNED AO CONSIDERING THAT THE INVESTMENTS MADE BY THE ASSESSEE DURING THE BLOCK PERIOD AMOUNTING TO RS.3,80,000/- AS INCOME FROM UNDISCLOSED SOURCES. AGGRIEVED BY THIS ORDER OF THE LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. THE LEARNED AR SUBMITTED BEFORE US THAT THE PROC EEDINGS INITIATED U/S 158BD OF THE ACT IS INVALID BECAUSE T HE INVESTMENT MADE BY THE ASSESSEE WAS DETECTED BY THE INVESTIGATING W ING OF THE REVENUE AND THE STATEMENT OF THE ASSESSEE WAS RECOR DED BY THE DDI ON 12-03-2001 AND NOT DURING THE COURSE OF SEARCH. THE LEARNED AR FURTHER SUBMITTED THAT IT HAS BEEN STATED IN THE SA TISFACTION NOTE THAT THE ASSESSEE IS THE SISTER-IN-LAW OF SHRI DEVENDRAN ATH G. CHATURVEDI AND ALSO HIS BENAMI AND ON ACCOUNT OF PROVISIONS OF BENAMI PROPERTY ACT, NO ADDITION COULD BE MADE ON THE HANDS OF SHRI DEVENDRANATH G. CHATURVEDI AND, THEREFORE, THE ADDITIONS WERE PROPO SED TO BE MADE IN THE HANDS OF THE ASSESSEE AND THEREFORE THE PROCEED INGS INITIATED U/S IT (SS)A NO.01/AHD/2009 [B. P.: 1991-92 TO 2000-01 (UP TO 07-03-2001)] SMT. SEEMA TIMIR DEY VS DCIT, CIR-14, AHMEDABAD 5 158BD OF THE ACT IS BAD IN LAW. THE LEARNED AR SUBM ITTED THAT THERE WAS NO SEIZURE OF ANY BOOKS OF ACCOUNTS, DOCUMENTS OR ANY OTHER EVIDENCE RELATABLE TO THE PROPERTIES AS EVIDENT FRO M THE SATISFACTION NOTE RECORDED BY THE REVENUE AND YET INVOKED JURISD ICTION UNDER SECTION 158BD OF THE ACT AND IT IS BAD IN LAW. THE LD. AR SUBMITTED THAT THE ONLY REASON FOR INITIATION OF THE PROCEEDI NGS WAS DUE TO THE STATEMENT OF THE APPELLANT RECORDED BY THE INVESTIG ATION WING AFTER THE SEARCH. THE LEARNED AR FURTHER RELIED ON THE DE CISION OF THE CASE MANISH MAHESHWARI, 289 ITR 841 AND KISHORILAL BALWA NTLAL, 17 SOT 380. WITH THESE SUBMISSION IT WAS, PRAYED THAT THE ASSESSMENT ORDER PASSED ON SUCH INVALID NOTICE REQUIRES TO BE QUASHE D. 6. ON THE OTHER HAND, THE LEARNED DR SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND RELIED UPON THE DECISION IN THE CASE OF MANGE RAM MITTAL, 9 SOT 371 (DEL) (SB). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE MATERIALS AVAILABLE BEFORE US. AT THE OUTSET, WE MU ST SAY THAT WE ARE NOT IN AGREEMENT WITH THE CONTENTION OF THE LEARNED AR CHALLENGING THE VALIDITY OF THE NOTICE ISSUED U/S 158 BD OF THE ACT. WE DRAW STRENGTH FROM THE DECISION CITED BY THE REVENUE IN THE CASE OF MANGE RAM MITTAL VS ACIT, 9 SOT 371 (DEL) (SB) WHEREIN IT HAS BEEN HELD AS UNDER: UNDISCLOSED INCOME HAS TO BE COMPUTED ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH AS WELL AS OTH ER MATERIALS OR INFORMATION RELATABLE TO SUCH EVIDENCE HOWEVER , IT CANNOT BE CONCLUDED THAT UNDISCLOSED INCOME IS TO BE COMPU TED SOLELY ON THE BASIS OF EVIDENCE FOUND DURING THE COURSE OF SEARCH IT (SS)A NO.01/AHD/2009 [B. P.: 1991-92 TO 2000-01 (UP TO 07-03-2001)] SMT. SEEMA TIMIR DEY VS DCIT, CIR-14, AHMEDABAD 6 OTHER MATERIALS OR INFORMATION GATHERED THE AO DURI NG THE COURSE OF POST-SEARCH ENQUIRY WHICH IS RELATABLE TO EVIDENCE FOUND AS A RESULT OF SEARCH CAN ALSO BE MADE THE BA SIS OF COMPUTATION OF UNDISCLOSED INCOME ARGUMENT THAT N OT ONLY THE EVIDENCE BUT THE MATERIAL AND INFORMATION AVAIL ABLE WITH THE AO SHOULD HAVE BEEN FOUND DURING THE COURSE OF SEAR CH IS CONTRARY TO THE PLAIN LANGUAGE OF THE PROVISIONS OF S. 158 BB(1) IT CANNOT BE HELD THAT CONCLUSIVE EVIDENCE OF UND ISCLOSED INCOME SHOULD BE FOUND DURING THE COURSE OF SEARCH ACTION ITSELF AND NOTHING FURTHER CAN BE ADDED OR SUPPLEME NTED BY WAY OF SUBSEQUENT ENQUIRY- IT IS THE EVIDENCE THAT HA S TO BE FOUND AS A RESULT OF SEARCH IN THE FIRST INSTANCE EXPRE SSION MATERIALS IS OF MUCH WIDER IMPORT THAN THE EXPRES SION EVIDENCE ALL MATERIALS OR INFORMATION GATHERED BY THE AO OR RECEIVED BY HIM IN THE PROCESS OF COMPUTATION OF UN DISCLOSED INCOME ON THE BASIS OF EVIDENCE WOULD CONSTITUTE MATERIALS OR INFORMATION RELATABLE TO SUCH EVIDENCE AO IS EN TITLED TO COLLECT FURTHER MATERIAL OR INFORMATION SO AS TO BR ING TO LOGICAL CONCLUSION EVIDENCE FOUND AS A RESULT OF SEARCH. 7.1 FURTHER, ON PERUSAL OF THE SATISFACTION NOTE RE CORDED IT IS EVIDENT THAT THE REVENUE HAD SUFFICIENT MATERIALS AND INFOR MATION IN RESPECT OF THE ASSESSEES INVESTMENTS FOUND AT THE TIME OF SEARCH. THE SATISFACTION NOTE HAS CATEGORICALLY STATED THAT TH E FACTUM OF THIS INVESTMENT CAME TO LIGHT ONLY IN THE REQUISITION PR OCEEDINGS U/S 132A, ACTION U/S 158 BD OF THE ACT IS PROPOSED. CONSIDER ING THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE REVENUE HAS RECO RDED THE SATISFACTION IN COMPLIANCE WITH PROVISIONS OF THE A CT AND THE ARGUMENT OF THE LEARNED AR REQUIRES TO BE REJECTED. THEREFOR E, GROUND NO.1 OF THE APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 8. THE LEARNED AR WITH RESPECT TO THE MERITS OF THE CASE SUBMITTED THAT THE ASSESSEE HAD INVESTED AN AMOUNT OF RS.1,30 ,000/- FOR ACQUISITION OF SWAGAT APARTMENT OUT OF THE LOAN OF RS.1,00,000/- IT (SS)A NO.01/AHD/2009 [B. P.: 1991-92 TO 2000-01 (UP TO 07-03-2001)] SMT. SEEMA TIMIR DEY VS DCIT, CIR-14, AHMEDABAD 7 RECEIVED FROM HDFC BANK LTD. AND THE REST FROM PERS ONAL SAVINGS. THE RELEVANT EVIDENCES WERE NOT CALLED FOR AT THE T IME OF INVESTIGATION AND LATER ON, THE ASSESSEE MIGRATED OUT OF THE COUN TRY AND THEREFORE, SUFFICIENT EVIDENCE COULD NOT BE PRODUCED BEFORE TH E LEARNED AO. THE LEARNED AR FURTHER SUBMITTED THAT THE ASSESSEE HAD NOT MADE INVESTMENT OF RS.2,50,000/- AS ALLEGED BY THE LEARN ED AO FOR PURCHASING THE OTHER PROPERTIES VIZ SAVITA ENCLAVE. THE LEARNED DR ON THE OTHER HAND, VEHEMENTLY OPPOSED TO THE SUBMIS SION OF THE LEARNED AR AND SUBMITTED THAT THE INVESTMENT OF RS. 3,80,000/- MADE BY THE ASSESSEE WERE NOT FROM TAX PAID INCOME BUT F ROM INCOME FROM UNDISCLOSED SOURCES AND THEREFORE, THE ORDER OF THE LEARNED AO MAY BE UPHELD. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RECORDS BEFORE US. ON PERUSING THE ASSESSMENT ORDER IT IS APPARENT THAT THE LEARNED AO HAD WORKED OUT THE INCOME FROM UNDISCLOSED SOURCE FROM THE VARIANCE OF RETURNED INCOME OF THE ASSESSEE AND THE INVESTMENT MADE. HOWEVER, IT IS PERTINENT TO NOTE THAT IN THE APPELLANTS CASE A LADY OF HER STATURE WILL DEFINIT ELY HAVE SOME PERSONAL SAVINGS FROM THE AMOUNT RECEIVED FROM HER HUSBAND, AND GIFTS RECEIVED FROM RELATIVES AND FRIENDS ON VARIOU S OCCASIONS. KEEPING INTO CONSIDERATION OF THIS FACT, WE ARE OF THE HUMBLE VIEW THAT OUT OF TOTAL AMOUNT OF RS.3,80,000/- AN AMOUNT OF R S.2,00,000/- COULD BE CONSIDERED AS SOURCE FROM SUCH SAVINGS. ACCORDIN GLY, WE SUSTAIN THE ORDER OF THE LEARNED AO WHICH IS CONFIRMED BY T HE LEARNED CIT(A) TO THE EXTENT OF RS.1,80,000/- TO BE THE INCOME FRO M UNDISCLOSED IT (SS)A NO.01/AHD/2009 [B. P.: 1991-92 TO 2000-01 (UP TO 07-03-2001)] SMT. SEEMA TIMIR DEY VS DCIT, CIR-14, AHMEDABAD 8 SOURCES OF THE ASSESSEE. GROUNDS NO.2 AND 3 OF THE APPEAL OF THE ASSESSEE ARE ACCORDINGLY PARTLY ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 18-05-2012 SD/- SD/- (D. K. TYAGI) JUDICIAL MEMBER (A. MOHAN ALANKAMONY) ACCOUNTANT MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD