Shri D. Rajkumar, Bangalore V. DCIT, Bangalore

ITSSA 9/BANG/2007

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 1689 (ITAT-BANGALORE)
• Duration Of Justice: 8 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-02-2016
• Assessment Year: misc
• Appeal Filed On: 02-03-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S VENKATESAN
• Keywords: Block assessment

Judgement Text

IT(SS)A.9 & 10/BANG/2007 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'B', BANGALORE BEFORE SHRI. ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AND SHRI. VIJAYPAL RAO, JUDICIAL MEMBER 1. I.T(SS).A NO.9/BANG/2007 (BLOCK PERIOD : 01.04.1995 TO 28.09.2001) 2. I.T(SS).A NO.10/BANG/2007 (BLOCK PERIOD : 01.04.1995 TO 28.09.2001) 1. SHRI. D. RAJKUMAR, PAN : ABWPR2930B 2. SMT. D. KOMALAKSHI, PAN : AEBPK4444F NO.1000, SERVICE ROAD, RPC LAYOUT, VIJAYANAGAR, BANGALORE .. APPELLANT V. DEPUTY COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE -1(3), BANGALORE .. RESPONDENT ASSESSEE BY : SHRI. S. VENKATESAN, CA REVENUE BY : MS. NEERA MALHOTRA, CIT HEARD ON : 08.02.2016 PRONOUNCED ON : 19.02.2016 O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : THESE ARE APPEALS FILED BY THE ASSESSEES CONCERNED , ASSAILING LEVY OF PENALTY U/S.158BFA(2) OF THE INCOME-TAX ACT, 1961 ( THE ACT IN SHORT). IT(SS)A.9 & 10/BANG/2007 PAGE - 2 02. FACTS APROPOS ARE THAT PREMISES OF THE ASSESSEE S WHO ARE HUSBAND AND WIFE, WERE SEARCHED U/S.132 OF THE ACT ON 28.09.200 1. ASSESSEE SHRI. D. RAJKUMAR WAS RUNNING A BUSINESS OF TRADING IN COFFE E SEEDS, WHEREAS HIS WIFE SMT. D. KOMALAKSHI WAS HAVING COMMISSION FROM REAL ESTATE BUSINESS AND RENTAL INCOME. PURSUANT TO THE SEARCH, ASSESSE ES WERE REQUIRED TO FILE RETURNS FOR BLOCK PERIOD 1995-96 TO 2001-02. SMT. D. KOMALAKSHI IN THE RETURN FILED DECLARED UNDISCLOSED INCOME OF RS.19,3 2,838/-, WHEREAS HER HUSBAND, SHRI. D. RAJKUMAR, DECLARED AN UNDISCLOSED INCOME OF RS.1,07,96,356/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTED HUGE INVESTMENTS MADE BY THE ASSESSEES IN VARIOUS P ROPERTIES. HE ALSO FOUND THAT ASSESSEES HAD CLAIMED LIABILITIES IN THE IR ACCOUNTS WHICH THEY COULD NOT SUBSTANTIATE. AO FINALLY ASSESSED UNDIS CLOSED INCOME OF SMT. D. KOMALAKSHI AT RS.1,83,93,650/- AND THAT OF SHRI. D. RAJKUMAR AT RS.4,64,85,000/-. 03. AO THEREAFTER PROCEEDED U/S.158BFA(2) OF THE AC T, FOR LEVY OF PENALTY UNDER THE SAID SECTION. ASSESSEES GAVE A R EPLY TO THE AO INTER ALIA STATING THAT THEY HAD PREFERRED APPEALS BEFORE THE CIT (A) VI, BANGALORE, AND PENALTY PROCEEDINGS SHOULD BE KEPT IN ABEYANCE TILL DISPOSAL OF THE APPEALS. HOWEVER, AO DID NOT ACCEPT THE ABOVE CONT ENTION. ACCORDING TO IT(SS)A.9 & 10/BANG/2007 PAGE - 3 HIM, APPEALS FILED BY THE ASSESSEES AGAINST THE BLO CK ASSESSMENTS DONE ON THEM BEFORE THE CIT (A) STOOD DISMISSED AS NOT MAIN TAINABLE FOR NON- PAYMENT OF ADMITTED TAX. AO ALSO NOTED THAT FURTHE R APPEALS PREFERRED BY THE ASSESSEE BEFORE THE TRIBUNAL WERE ALSO DISMISSE D BY THE TRIBUNAL, VIDE ORDER DT.30.11.2005 IN IT(SS)A.NOS.163 & 164/BANG/2 004. AO THEREFORE HELD THAT THE BLOCK ASSESSMENTS HAD BECOME FINAL AN D FOR THE DIFFERENCE BETWEEN THE INCOME DECLARED IN THE BLOCK RETURN AND THE ASSESSED UNDISCLOSED INCOME, PROVISIONS OF SECTION 158BFA(2) OF THE ACT WAS APPLIED. HE LEVIED PENALTY IN ACCORDANCE WITH THE SAID SECTION ON BOTH THE ASSESSEES. 04. AGGRIEVED, ASSESSEES MOVED IN APPEAL BEFORE THE CIT (A). CIT (A) AGREED WITH THE VIEW TAKEN BY THE AO. THOUGH THE A SSESSEES RELIED ON A DECISION OF COORDINATE BENCH IN THE CASE OF NEMICHA ND V. ACIT [IT(SS)A.21/BANG/2001, DT.21.12.2004], CIT (A) WAS OF THE OPINION THAT SEIZED GOLD BEING AVAILABLE WITH THE DEPARTMENT COU LD NOT BE CONSIDERED IN LIEU OF PAYABLE TAXES. 05. NOW BEFORE US, LD. AR STRONGLY ASSAILING THE OR DER OF CIT (A) SUBMITTED THAT ASSESSEES HAD AGAINST THE DECISION O F LOWER AUTHORITIES, REFUSING TO ADMIT THEIR APPEALS FOR BLOCK ASSESSMEN TS MOVED THE HONBLE IT(SS)A.9 & 10/BANG/2007 PAGE - 4 JURISDICTIONAL HIGH COURT. PLACING A COPY OF THE J UDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IN ITA.768/2006 AND ITA.7 69/2011, DT.04.12.2005, LD. AR SUBMITTED THAT HONBLE JURISD ICTIONAL HIGH COURT HAD REMITTED THE APPEALS OF THE ASSESSEES AGAINST T HE BLOCK ASSESSMENT BACK TO THE FILE OF THE APPELLATE COMMISSIONER. AS PER THE LD. AR, ASSESSEE HAD SOUGHT AUCTION OF THE JEWELLERY SEIZED AT THE TIME OF SEARCH AND APPROPRIATION OF THE SAME AGAINST TAXES, WHICH WAS NOT DONE BY THE DEPARTMENT. ACCORDING TO HIM, HONBLE JURISDICTION AL HIGH COURT HAD EXTENDED THE DATE FOR PAYMENT OF TAX ON ADMITTED IN COME UP TO 12.03.2009 AND BY THIS, THE ENTIRE TAX ON THE ADMITTED INCOME STOOD PAID. UNLESS AND UNTIL THE APPEALS OF THE ASSESSEES AGAINST THE ADDI TIONS MADE IN THE BLOCK ASSESSMENTS WERE DISPOSED OFF BY THE CIT (A), AS P ER THE LD. AR, IT WOULD BE PREMATURE TO LEVY PENALTY ON THE ASSESSEE U/S.15 8BFA(2) OF THE ACT. 06. PER CONTRA, LD. DR SUBMITTED THAT CIT (A) EVEN IN THE REMANDED PROCEEDINGS, LD. CIT (A) WOULD NOT BE ABLE TO TAKE A DIFFERENT VIEW SINCE THE LAW CLEARLY STIPULATED THAT ADMITTED TAX WERE T O BE PAID FOR ADMISSION OF APPEALS FILED BEFORE HIM. 07. WE HAVE HEARD THE RIVAL CONTENTIONS. AGAINST T HE BLOCK ASSESSMENTS, IT IS AN ADMITTED POSITION THAT ASSESSEE HAD FILED APPEAL BEFORE THE CIT (A) IT(SS)A.9 & 10/BANG/2007 PAGE - 5 AND FURTHER APPEAL BEFORE THE TRIBUNAL, BOTH OF WHI CH WERE DISMISSED, FOR A REASON THAT ASSESSEES HAD FAILED TO REMIT TAX ON TH E DECLARED INCOME. ASSESSEES HAD MOVED BEFORE THE HONBLE JURISDICTION AL HIGH COURT POINTING OUT THAT THEY HAD REQUESTED THE DEPARTMENT TO AUCTI ON THE JEWELLERY SEIZED AT THE TIME OF SEARCH AND APPROPRIATE IT AGAINST TH E TAX. HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHRI. D. R AJKUMAR HAD HELD AS UNDER AT PARAS 2 TO 12 OF ITS ORDER : 2. PURSUANT TO THE SAID ORDER DATED 8.11.2006, THE APPELLANT DEPOSITED A SUM OF RS.3,50,000/- ON 14.11.2006 AND WROTE TO THE CONCERNED DEPUTY COMMISSIONER OF INCOME TAX TO EITHER RELEASE THE SE IZED JEWELLERY OF THE ASSESSEE SO THAT IT MAY BE SOLD AN D TAX MAY BE DEPOSITED OR IN THE ALTERNATIVE, THE DEPARTM ENT ITSELF MAY SELL THE ENTIRE SEIZED JEWELLERY WEIGHIN G OVER SIX KILOGRAMS AND APPROPRIATE THE AMOUNT TOWARDS THE TA X LIABILITY AND HEAR THE APPEAL ON MERITS. WHEN THERE WAS NO RESPONSE GIVEN TO THE SAID LETTER, THE ASSESSEEDEPOSITED A FURTHER AMOUNT OF RS.2,00,000/- ON 23.11.2006 AND FURTHER WROTE TO THE CONCERNED DEPUTY COMMISSIONER OF INCOME TAX ON 5.12.2006 AGAI N REQUESTING THE DEPARTMENT TO SELL THE SEIZED JEWELL ERY OF THE ASSESSEE AND ADJUST THE PROCEEDS TOWARDS THE TA X PAYABLE ON ADMITTED INCOME. THE RESPONDENT-DEPARTME NT DID NOT RESPOND TO THE TWO COMMUNICATIONS MADE BY THE ASSES SEE, EVEN THOUGH AN AMOUNT OF RS.5,50,000/- HAD BEEN PAI D BY THE ASSESSEE, OUT OF THE SHORTFALL OF TAX AMOUNT ING TO A LITTLE OVER RS.13 LAKHS. 3. HOWEVER, IN THE YEAR 2009, THE SEIZED JEWELLERY OF THE ASSESSEE WAS AUCTIONED AND ADJUSTMENT OF THE BALANCE TAX PAYABLE, AMOUNTING TO RS.13,22,759/-, W AS MADE ON 12.3.2009 AND ORDER DATED 28.7.2009 WAS PASSED TO T HE _ IT(SS)A.9 & 10/BANG/2007 PAGE - 6 EFFECT THAT THE ENTIRE TAX ON THE ADMITTED INCOME H AD BEEN PAID BY THE ASSESSEE. 4. THE ASSESSEE HAS FILED THIS APPLICATION IA NO.1/ 2012 PRAYING FOR GRANT OF EXTENSION OF TIME FOR PAYMENT OF TAX O N ADMITTED INCOME UP TO 12.3.2009, IN PLACE OF FOUR WEEKS, AS WAS ALLOWED BY ORDER DATED 8.11.2006 WHILE DISPOSING OF THIS AP PEAL. 5. IT IS CONTENDED BY THE LEARNED COUNSEL FOR THE A PPLICANT- ASSESSEE THAT THE INTENTION OF THE ASSESSEE WAS ALW AYS THERE TO MAKE PAYMENT WITHIN FOUR WEEKS TIME GRANTED AND THE ASSESSEE HAD EVEN DEPOSITED RS.5,50,000/- WITH THE DEPARTMEN T AND HAD MADE A REQUEST TO SELL THE SEIZED JEWELLERY OF THE ASSESSEE TO MAKE GOOD THE DEFICIENCY OF TAX, BUT IT IS CONTENDE D THAT INSTEAD OF ACCEPTING THE PRAYER OF THE ASSESSEE AT THAT STA GE, THE DEPARTMENT SOLD THE SEIZED JEWELLERY OF THE ASSESSE E AFTER MORE THAN TWO YEARS AND ADJUSTED THE AMOUNT TOWARDS TAX LIABILITY OF THE ASSESSEE. 6. SUBMISSION OF THE LEARNED COUNSEL FOR THE APPEL LANT, THUS, IS THAT THE TIME FOR PAYMENT OF ADMITTED TAX AMOUNT BE EXTENDED TILL THE DATE WHEN THE SEIZED JEWELLERY OF THE ASSESSEE WAS AUCTIONED AND AMOUNT SO RECOVERED FROM SUCH SAL E BY AUCTION WAS ADJUSTED TOWARDS PAYMENT OF TAX. 7. SRI. K.V. ARAVIND, LEARNED COUNSEL FOR THE RESPO NDENT- REVENUE HAS OPPOSED THE PRAYER PRIMARILY ON THE GRO UND THAT THE LAW REQUIRES THE APPEAL TO BE ENTERTAINED ONLY WHEN THE TAX ON THE ADMITTED INCOME IS PAID, AND ONCE TH E SAME WAS NOT PAID BEFORE FILING OF THE APPEAL, THE ORDER PASSED BY THE DEPARTMENT DISMISSING THE APPEALS WAS FULLY JUSTIFIED AND THE ASSESSEE, NOT HAVING DEPOSITED TH E AMOUNT WITHIN THE EXTENDED TIME GRANTED BY THIS COURT ON 8.11.2006, FURTHER DEFAULTED, WHICH WOULD MAKE THE CASE OF THE ASSESSEE WORSE AND NO FURTHER TIME SHOULD BE GRANTE D. 8. WE HAVE HEARD THE LEARNED COUNSEL FOR THE PARTIE S AND HAVE PERUSED THE RECORDS. # IT(SS)A.9 & 10/BANG/2007 PAGE - 7 9. NO DOUBT, THE APPELLANT WAS GRANTED FOUR WEEKS TIME ON 8.11.2006 TO MAKE GOOD THE DEFICIENCY OF TAX, BUT, IT IS ALSO NOTICED THAT EFFORTS WERE MADE BY THE ASSESSEE WITH IN SUCH TIME GRANTED TO MAKE PAYMENTS OF THE TAX AND IT IS NOT DISPUTED THAT A SUM OF RS.5,50,000/- HAD ALSO BEEN DEPOSITED WITHIN THE TIME SO GRANTED BY THIS COURT. THE ASSESSEE HAD ALS O MADE A REQUEST FOR SELLING THE SEIZED JEWELLERY OF THE ASS ESSEE AND ADJUST THE AMOUNT TOWARDS PAYMENT OF TAX. WHAT WE NOTICE I S THAT THE REVENUE HAD NOT RESPONDED TO SUCH REQUEST OF TH E ASSESSEE WITHIN A REASONABLE TIME AND THEN PROCEEDED TO AUCT ION/SELL THE SEIZED JEWELLERY OF THE ASSESSEE AFTER TWO YEARS AN D ADJUST THE SALE AMOUNT TOWARDS PAYMENT OF TAX. 10. THE CONTENTION OF THE LEARNED COUNSEL FOR THE APPLI CANT ASSESSEE THAT HAD THE REQUEST OF THE ASSESSEE BEEN ACCEPTED ON 14.11.2006 ITSELF, THERE WOULD HAVE BEEN NO DEFAULT IN PAYMENT OF TAX. IT HAS ALSO BEEN CONTENDED THAT THE DELAY IN D EPOSITING THE AMOUNT HAS BEEN FOR REASONS BEYOND THE CONTROL OF T HE APPLICANT- ASSESSEE. 11. THE ENDEAVOUR OF THE AUTHORITIES SHOULD ALWAYS BE TO DECIDE THE APPEALS ON MERITS, INSTEAD OF DISMISSING THE SA ME ON TECHNICAL GROUNDS. KEEPING THAT IN VIEW, THIS COURT, HAD VIDE ORDER DATED 8.11.2006, GRANTED FOUR WEEKS TIME. AS WE HAV E ALREADY NOTICED ABOVE, THE APPELLANT-ASSESSEE HAD M ADE EVERY EFFORT TO DEPOSIT THE TAX ON ADMITTED INCOME WITHIN SUCH TIME THAT WAS GRANTED BY THIS COURT 12. IN OUR VIEW, THE ASSESSEE CANNOT BE FAULTED FOR THE RESPONDENT-REVENUE HAVING AUCTIONED THE JEWELLERY O F THE ASSESSEE AFTER TWO YEARS WHEN REQUEST WAS MADE TO A UCTION IT IMMEDIATELY AND ADJUST THE SALE AMOUNT TOWARDS TAX. AS SUCH, IN THE PECULIAR FACTS AND CIRCUMSTANCES OF THIS CAS E, WE ALLOW THIS APPLICATION, EXTEND THE TIME FOR PAYMENT OF TAX ON ADMITTED INCOME UP TO 12.3.2009 IN PLACE OF FOUR WE EKS AS WAS ALLOWED BY ORDER DATED 8. 11.2006 AND DIRECT TH E APPELLATE COMMISSIONER TO DECIDE THE APPEAL OF THE ASSESSEE O N MERITS, IN ACCORDANCE WITH LAW. IT(SS)A.9 & 10/BANG/2007 PAGE - 8 08. HONBLE JURISDICTIONAL HIGH COURT HAD FOLLOWED THE VERY SAME JUDGMENT IN THE CASE OF SMT. D. KOMALAKSHI IN ITA.7 68/2006. THUS AS ON DATE, THE QUANTUM APPEALS HAVE BEEN REMITTED BACK T O THE APPELLATE COMMISSIONER, FOR DECIDING THEM ON MERITS. HONBLE JURISDICTIONAL HIGH COURT ALSO NOTED THAT ENDEAVOUR OF APPELLATE AUTHOR ITIES SHOULD ALWAYS BE TO DECIDE THE APPEALS ON MERITS INSTEAD OF DISMISSING THEM ON TECHNICAL GROUNDS. IN OUR OPINION, SINCE THE APPEALS OF THE ASSESSEES AGAINST BLOCK ASSESSMENTS ARE YET TO BE DECIDED BY THE CIT (A) ON MERITS, THE QUESTION OF LEVY OF PENALTY U/S.158BFA(2) OF THE ACT, DOES NOT ARISE. LOWER AUTHORITIES CAN TAKE A FIRM VIEW REGARDING SUCH LEVY ONLY AFTER THERE IS FACTUAL CLARITY ON THE ADDITIONS MADE AND, IF ANY SUSTAINED IN THE BLOCK ASSESSMENTS. WE ARE THEREFORE OF THE OPINION THAT THE ISSUE REGARDI NG LEVY OF PENALTY U/S.158BFA(2) OF THE ACT, HAS TO BE LOOKED INTO BY THE AO ONCE AGAIN AFTER CONSIDERING THE SITUATION ARISING CONSEQUENT TO THE JUDGMENTS OF THE HONBLE JURISDICTIONAL HIGH COURT MENTIONED SUPRA. WE THEREFORE SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND REMIT THE ISSUE OF LEVY OF PENALTY U/S.158BFA(2) OF THE ACT, BACK TO THE FILE OF AO FO R CONSIDERATION AFRESH IN ACCORDANCE WITH LAW. IT(SS)A.9 & 10/BANG/2007 PAGE - 9 09. THOUGH THE ASSESSEES HAVE RAISED VARIOUS GROUND S INCLUDING GROUNDS QUESTIONING THE VALIDITY OF THE SEARCH, WE DEEM IT UNNECESSARY TO ADJUDICATE SUCH ISSUES AT THE PRESENT JUNCTURE. NEEDLESS TO S AY ALL THESE ISSUES WILL REMAIN OPEN. 10. IN THE RESULT, APPEALS OF THE ASSESSEES ARE ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 19TH DAY OF F EBRUARY, 2016. SD/- SD/- (VIJAYPAL RAO) (ABRAH AM P GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER