M. Sriram Prasad, Hyderabad V. ACIT,Cir-3(1), Hyderabad

MA 187/HYD/2011

• Counselvise Citation: [2013] 124 COUNSELVISE.COM (IT) 0242 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-05-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 21-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: A V RAGHURAM
• Keywords: Search and seizure; Block assessment
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIA L MEMBER MISC APPLN. NO.187/HYD/2011 (IN IT(SS)A NO.107/HYD/03) :BLOCK PERIOD FR OM 1986-87 TO 1996-97 SHRI M.SRIRAM PRASAD, HYDERABAD ( PAN - APAPM 1635G) V/S. ASSTT. COMMISSIONER OF INCOME- TAX, CIRCLE 3(1), HYDERABAD (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI A.V.RAGHURAM, AR RESPONDENT BY : SHRI M.H.NAIK, DR DATE OF HEARING 26.04.2013 DATE OF PRONOUNCEMENT 21.5.2013 O R D E R PER SAKTIJIT DEY, JUDICIAL MEMBER: THIS APPLICATION UNDER S.254(2) OF THE INCOME-TA X ACT, 1961 HAS BEEN FILED BY THE ASSESSEE PURSUANT TO THE DIRECTIO N OF HONBLE HIGH COURT IN WP NO.21739 DATED 22.6.2009. THE APPLICANT-ASSESSEE T HROUGH THIS APPLICATION SEEKS RECTIFICATION/CLARIFICATION OF THE ORDER OF T HIS TRIBUNAL DATED 31.2.2007 IN IT(SS)A NO.107/HYD/2003 FOR THE BLOCK PERIOD FROM 1 987-88 TO 1996-97. 2. BRIEF FACTS LEADING TO THE FILING OF THE PRES ENT APPLICATION ARE THAT PURSUANT TO SEARCH AND SEIZURE OPERATIONS UNDER S.1 32 OF THE INCOME-TAX ACT, 1961 CONDUCTED ON 25.3.1997 IN THE RESIDENTIAL PREM ISES OF SHRI M.SRINIVASA PRASAD AS WELL AS OFFICE PREMISES OF BOSS INDUSTRIE S LIMITED SITUATED AT JOURNALIST COLONY, BANJARA HLLLS, HYDERABAD. DURING THE COURS E OF SEARCH THE AUTHORISED OFFICERS FOUND BOOKS OF ACCOUNT RELATING TO SATHYA KAMAL AGROS LIMITED. THE APPLICANT ASSESSEE HEREIN, SHRI M.SRIRAMA PRASAD, W HO IS A BROTHER OF SHRI M.SRINIVASA PRASAD, MANAGING DIRECTOR OF BOSS INDUS TRIES, WAS ALSO PRESENT IN THE RESIDENTIAL PREMISES OF SHRI M.SRINVASA PRASAD. THE AUTHORISED OFFICERS RECORDED A SWORN STATEMENT FROM SHRI M.SRIRAM PRASA D ON THE DAY OF SEARCH MISC. APPLN NO.187/HYD /2011 (IN IT(SS)A NO.107/ HYD/2003) SHRI M. SRIRAM PRASAD, HYDERABAD 2 LAND QUESTIONED HIM ABOUT DETAILS OF INVESTMENTS O F HIMSELF AS WELL AS IN THE NAMES OF HIS FAMILY MEMBERS. 3. ON THE BASIS OF SWORN STATEMENT RECORDED FROM T HE ASSESSEE HEREIN AND OTHER EVIDENCE AVAILABLE IN THE BOOKS OF ACCOUN T OF M/S. SATHYA KAMAL AGROS LIMITED, PROCEEDINGS WERE INITIATED AGAINST THE ASS ESSEE UNDER S.158BD OF THE ACT. IN RESPONSE TO THE NOTICE UNDER S.158BD, ASSE SSEE FILED NIL RETURN OF INCOME, NOTWITHSTANDING UNDISCLOSED INCOME OF RS.20 LAKHS OFFERED IN THE COURSE OF STATEMENT RECORDED UNDER S.132(4) OF THE ACT AT THE TIME OF SEARCH. THE ASSESSEE ENCLOSED A LETTER ALONGWITH THE BLOCK RETU RN OF INCOME STATING THAT AT THE TIME OF RECORDING HIS STATEMENT, HE HAD IN MIND THE VOLUNTARY DISCLOSURE SCHEME AND FOLLOWED IT UP WITH A DECLARATION U/S. 6 5(1) OF THE FINANCE ACT, 1997, WHICH WAS FILED ON 31.12.1997 AND PAID AN AMO UNT OF RS.6,67,800 WITH INTEREST ON 31.3.1998. THE ASSESSEE THUS DISCLOSED AN INCOME OF RS.21 LAKHS IN THE VDIS AND PAID THE TAXES UPTO 31.3.1998 AND REQU ESTED TO ACCEPT THE NIL RETURN FILED. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND IGNORING THE DECLARATION OF INCOME CLAIMED UNDER VDIS, DETERMINED THE UNDISCLOSED INCOME OF THE ASSESSEE F OR THE BLOCK PERIOD AT RS.31,92,298, AND ACCORDINGLY COMPLETED THE BLOCK A SSESSMENT THEREON, VIDE ASSESSMENT ORDER DATED 29.2.2000 PASSED UNDER S.15 8BD OF THE ACT. 4. ON APPEAL, THE CIT(A) ALSO DID NOT ACCEPT THE C ONTENTIONS OF THE ASSESSEE WITH REGARD TO THE RELIEF ACCRUED TO HIM O N ACCOUNT OF THE DECLARATION OF INCOME UNDER VDIS AND THE INVESTMENTS MADE BY THE A SSESSEES WIFE AND CHILDREN IN M/S.SATYA KAMAL AGROS LTD. HE HOWEVER, ACCEPTED THE ASSESSEES PLEA FOR REDUCING THE INCOMES RETURNED BY HIM FOR T HE ASSESSMENT YEARS 1989- 90 TO 1995-96, FROM THE UNDISCLOSED INCOME DETERMIN ED FOR THE BLOCK PERIOD, AND THUS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. ON FURTHER APPEAL, THE TRIBUNAL AFTER ELABORATE DISCUSSION OF THE POINT AT DISPUTE IN THE CONTEXT OF THE GROUNDS RAIS ED BEFORE IT, HAS ACCEPTED THE MISC. APPLN NO.187/HYD /2011 (IN IT(SS)A NO.107/ HYD/2003) SHRI M. SRIRAM PRASAD, HYDERABAD 3 CONTENTIONS OF THE ASSESSEE, MORE SPECIFICALLY IN R ELATION TO RS.21 LAKHS COVERED BY VDIS DECLARATION AND ULTIMATELY ALLOWED THE APPE AL OF THE ASSESSEE. 6. THE ASSESSING OFFICER, WHILE PASSING THE CONSEQ UENTIAL ORDER FOR GIVING EFFECT TO THE ORDERS OF THE CIT(A) AND THE T RIBUNAL HAS DETERMINED THE UNDISCLOSED INCOME AT RS.9,24,000, COMPUTING THE SA ME IN THE FOLLOWING MANNER- INCOME AS PER ASST. ORDER RS.31,92,298 RELIEF GRANTED BY CIT(A) RS. 1,68,298 RS.30,24,000 RELIEF GRANTED BY ITAT RS.21,00,000 BALANCE UNDISCLOSED INCOME RS. 9,24,000 THE ASSESSING OFFICER THUS PASSED THE ORDER ON THE ABOVE LINES RAISING DEMAND ON RS.9,24,000 AND ALSO ISSUED PENALTY NOTICE S.158 BFA, WHICH ULTIMATELY CULMINATED IN IMPOSITION OF PENALTY OF RS.5,54,000. 7. THE ASSESSEE FILED WRIT PETITION, BEING WP NO.2 1739 OF L2008, PRAYING FOR QUASHING OF THE CONSEQUENTIAL ORDER AND PENALTY ORDER, ON THE GROUND THAT THE TRIBUNAL HAS ALLOWED THE APPEAL OF THE ASSESSEE IN ITS ENTIRETY. THEREUPON, THE HONBLE HIGH COURT UPON HEARING THE ADVOCATES FOR THE PARTIES, PASSED ORDER DATED 22.6.2009, WHICH READS AS FOLLOW S- AT THE TIME OF HEARING OF THIS PETITION, THE LEARN ED ADVOCATES HAVE AGREED THAT THE PETITIONER SHALL SUBMIT AN APPLICAT ION TO THE INCOME TAX APPELLATE TRIBUNAL , HYDERABAD BENCH A FOR RECTIF ICATION OF ITS ORDER DT.31.12.2007 IN I.T.(S.S.) A NO.107/HYD/2003, FOR THE BLOCK PERIOD 1986-987 TO 1996-97. LEARNED STANDING COUNSEL APPEARING FOR THE RESPONDE NT AUTHORITIES HAS FAIRLY SUBMITTED THAT THE RESPONDENTS WOULD NOT OBJ ECT TO THE SAID APPLICATION BEING ENTERTAINED BY THE TRIBUNAL. IF SUCH AN APPLICATION IS FIELD, WE HOPE THAT THE T RIBUNAL SHALL DECIDE THE SAME AFTER HEARING THE PARTIES WITHIN TWO MONTHS FR OM THE DATE OF FILING OF THE APPLICATION. TILL THE AFORESAID APPLICATION IS FINALLY DECIDED, AND AN MISC. APPLN NO.187/HYD /2011 (IN IT(SS)A NO.107/ HYD/2003) SHRI M. SRIRAM PRASAD, HYDERABAD 4 ORDER PASSED THEREON IS COMMUNICATED TO THE PETITIO NER, THE IMPUGNED CONSEQUENTIAL ORDERS AND THE ORDER OF PENALTY SHALL NOT BE IMPLEMENTED. IN VIEW OF THE ABOVE ORDER, THE PETITIONS STANDS DI SPOSED OF AS WITHDRAWN WITH NO ORDER AS TO COSTS. IN PURSUANCE OF THE SAID ORDER OF THE HONBLE HIGH COURT, ASSESSEE HAS FILED THE PRESENT MISCELLANEOUS APPLICATION UNDER S.254(2) OF THE ACT. 8. REITERATING THE CONTENTIONS RAISED BEFORE THE H ONBLE HIGH COURT AND IN THE PRESENT APPLICATION, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS RAISED GROUNDS IN THE APPEAL BEFORE TH E TRIBUNAL CONTESTING ALL THE ADDITIONS MADE BY THE ASSESSING OFFICER WHICH HAVE BEEN SUSTAINED BY THE CIT(A), INCLUDING THE INVESTMENTS MADE BY THE WIFE AND CHILDREN OF THE ASSESSEE IN M/S. SATHYA KAMAL AGROS LTD, AND THE TRIBUNAL AF TER ELABORATE CONSIDERATION OF ALL THE GROUNDS RAISED AND THE ISSUES INVOLVED I N THE APPEAL BEFORE IT, ALLOWED THE APPEAL OF THE ASSESSEE, AND THUS DELETED ALL TH E ADDITIONS SUSTAINED BY THE CIT(A). IT IS SUBMITTED IN THIS CONTEXT THAT THERE WAS NO SEARCH WARRANT EITHER ON M/S. STHYA KAMAL AGROS LTD. OR ITS MANAGING DIRE CTOR, I.E. THE APPLICANT HEREIN. IT IS ALSO SUBMITTED THAT WHEN THE TRIBUN AL HAS CONSIDERED ALL THE GROUNDS RAISED BY THE ASSESSEE, AND AFTER CONSIDERI NG THE ELABORATE ARGUMENTS OF THE ASSESSEE, THERE IS NO MERIT IN THE CONTENTIO NS OF THE REVENUE THAT THE TRIBUNAL HAS DELETED ONLY THE ADDITION MADE BY THE ASSESSING OFFICER BASED ON THE DECLARATION UNDER VDIS MADE BY THE ASSESSING OF FICER, AND CONSEQUENTLY ASSESSMENT SURVIVES IN RELATION TO ADDITIONS MADE W ITH REGARD TO INVESTMENTS MADE BY THE WIFE AND CHILDREN OF ASSESSEE IN M/S. S ATHYA KAMAL AGROS LTD. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE CONTRARY, OPPOSING THE ABOVE CONTENTIONS OF THE ASSESSEE, SUB MITTED THAT THE TRIBUNAL HAS GRANTED RELIEF ONLY TO THE EXTENT OF THE UNDISCLOSE D INCOME COVERED BY THE DECLARATION OF THE ASSESSEE UNDER VDIS, AND CONSEQU ENTLY, THE ORDER PASSED BY THE ASSESSING OFFICER FOR GIVING EFFECT TO THE ORDE R OF THE TRIBUNAL IS VERY MUCH CORRECT. HE SUBMITTED THAT THE CATEGORICAL FINDING S OF THE TRIBUNAL LEAVE NO ROOM MISC. APPLN NO.187/HYD /2011 (IN IT(SS)A NO.107/ HYD/2003) SHRI M. SRIRAM PRASAD, HYDERABAD 5 FOR ANY DOUBT THAT THE RELIEF GRANTED BY THE TRIBUN AL IS CONFINED TO THE UNDISCLOSED INCOME COVERED BY THE DECLARATION OF TH E ASSESSEE UNDER VDIS. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD, IN THE LIGHT OF THE ORDER OF THE TRIBUNA L DATED 31.12.2007. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS RAISED AS MAN Y AS NINE GROUNDS OF APPEAL, WHICH REVOLVE AROUND THE ASSESSABILITY OF UNDISCLOS ED INCOME COVERED BY THE INCOME DECLARED BY THE ASSESSEE UNDER VDIS AND INVE STMENTS IN M/S. SATHYA KAMAL AGROS LTD. BY THE WIFE AND CHILDREN OF THE AS SESSEE. GROUNDS OF APPEAL NO.4, 5 AND 6 SPECIFICALLY REFER TO THE INVESTMENTS MADE BY THE WIFE AND CHILDREN OF THE ASSESSEE. THE CONCLUDING PORTION OF PARA 9 AND PARA 10 OF THE TRIBUNALS ORDER READS AS UNDER- 9. ..A SIMILAR VIEW WAS TAKEN BY THE CHANDIGARH BENCH OF THIS TRIBUNAL IN THE CASE OF DCIT V/S. SMT. RANJ IT KAUR & ORS.(2003)81 TTJ 269(CHD). ACCORDINGLY, WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND DELETE THE ENTIRE ADDI TION. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAN DS ALLOWED. (EMPHASIS SUPPLIED BY US) THE ABOVE PART OF THE ORDER OF THE TRIBUNAL CLEARLY INDICATES THAT THE ENTIRE ADDITION, AND NOT MERELY THAT PART OF THE ADDITION, WHICH IS COVERED BY THE VDIS DECLARATION OF THE ASSESSEE, HAS BEEN DELETED, BY S ETTING ASIDE THE ORDERS OF THE LOWER AUTHORITIES. SIMILARLY, THE CONCLUDING SENTE NCE OF THE ORDER IN PARA 10 THEREOF INDICATES THAT THE ENTIRE APPEAL OF THE ASS ESSEE, INCLUDING THE GROUNDS OF THE ASSESSEE, RELATING TO THAT PART OF THE ADDITION MADE BY THE ASSESSING OFFICER IN THE BLOCK ASSESSMENT, WHICH RELATES TO INVESTMEN TS MADE BY THE WIFE AND FAMILY MEMBERS OF THE ASSESSEE, ARE ALLOWED. MISC. APPLN NO.187/HYD /2011 (IN IT(SS)A NO.107/ HYD/2003) SHRI M. SRIRAM PRASAD, HYDERABAD 6 11. NOTWITHSTANDING THE ABOVE POSITION, IF IT IS THE CASE OF THE REVENUE THAT THE RELIEF GRANTED BY THE TRIBUNAL IS CONFINED TO UNDISCLOSED INCOME COVERED BY THE DECLARATION MADE UNDER VDIS, IT SIMULTANEOUS LY IMPLIES THAT THE TRIBUNAL HAS NOT GIVEN ITS FINDINGS IN RELATION TO THE ADDIT IONS MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A) WITH REGARD TO INVESTMENTS MADE BY THE ASSESSEES WIFE AND CHILDREN IN M/S. SATHYA KAMAL A GROS LTD, AND THUS THERE WAS AN OMISSION ON THE PART OF THE TRIBUNAL IN ADJUDICA TING ON THE GROUNDS IN THAT BEHALF. IF THAT IS THE VIEW OF THE DEPARTMENT, IN ALL FAIRNESS, THE REVENUE OUGHT TO HAVE, AT THAT STAGE ITSELF, VIZ. AT THE EARLIEST , OUGHT TO HAVE MOVED A PETITION UNDER S.254(2) OF THE ACT, INSTEAD OF RESORTING TO PASSING CONSEQUENTIAL ORDER AND INITIATING PENALTY PROCEEDINGS BASED ON ITS OWN INTERPRETATION OF INCOMPLETE ADJUDICATION MADE BY THE TRIBUNAL. THE DEPARTMENT COULD HAVE AT LEAST, GIVEN OPPORTUNITY TO THE ASSESSEE TO PUT FORTH HIS SAY BE FORE PASSING THE CONSEQUENTIAL ORDER, SO THAT THE ASSESSEE COULD HAVE MOVED A MISC ELLANEOUS APPLICATION UNDER S.254(2) OF THE ACT, SEEKING ADJUDICATION ON THE GR OUNDS, WHICH ACCORDING TO THE REVENUE, AS POINTED OUT TO HIM, HAVE BEEN OMITTED T O BE ADJUDICATED UPON BY THE TRIBUNAL. IT IS ON ACCOUNT OF UNILATERAL ACTIO N OF THE DEPARTMENT, BASED ON ITS OWN APPRECIATION OF THE ORDER OF THE TRIBUNAL, IN PASSING THE CONSEQUENTIAL ASSESSMENT ORDER AND INITIATING PENALTY PROCEEDINGS , THAT THE ASSESSEE HAD TO MOVE THE HONBLE HIGH COURT WITH A WRIT PETITION FO R QUASHING SUCH ORDERS. 12. IN ANY EVENT, IN VIEW OF THE ABOVE DISCUSSION , ON A CAREFUL READING OF THE ORDER OF THIS TRIBUNAL DATED, WE FIND THAT THE TRIBUNAL HAS TAKEN NOTE OF THE VARIOUS ARGUMENTS OF THE PARTIES NOT ONLY IN RELATI ON TO THE UNDISCLOSED INCOME COVERED BY THE ASSESSEES DECLARATION UNDER VDIS BU T ALSO INVESTMENTS MADE BY THE WIFE AND CHILDREN OF THE ASSESSEE, AND THE OPER ATIVE AND CONCLUDING OBSERVATIONS OF THE TRIBUNAL QUOTED HEREIN BEFORE, DELETING THE ENTIRE ADDITION AND ALLOWING THE APPEAL, INDICATES THAT ADJUDICATIO N HAS BEEN MADE IN RELATION TO ALL THE ISSUES RAISED IN THE GROUNDS OF APPEAL OF T HE ASSESSEE IN ITS APPEAL. MISC. APPLN NO.187/HYD /2011 (IN IT(SS)A NO.107/ HYD/2003) SHRI M. SRIRAM PRASAD, HYDERABAD 7 13. IT IS PERTINENT TO NOTE, AT THIS JUNCTURE, THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF CITV/S. KARAM CHAND THAPAR & BROS P. LTD.(176 ITR 535) WHEREIN IT WAS HELD THAT THE DECI SION OF THE TRIBUNAL IS NOT TO BE SCRUTINIZED SENTENCE BY SENTENCE MERELY TO FIND OUT WHETHER ALL FACTS HAVE BEEN SET OUT IN DETAIL BY THE TRIBUNAL OR WHETHER S OME INCIDENTAL FACT WHICH APPEARS ON THE RECORD HAS NOT BEEN NOTICED BY THE T RIBUNAL IN ITS JUDGMENT. IF THE TRIBUNAL HAS PASSED THE ORDER AFTER TAKING INTO ACCOUNT ALL RELEVANT MATERIAL AND HAS NOT TAKEN INTO ACCOUNT ANY IRRELEVANT MATER IAL IN ARRIVING AT ITS CONCLUSION, THE DECISION OF THE TRIBUNAL IS NOT LIA BLE TO BE INTERFERED WITH. 14. IN THE LIGHT OF THE FOREGOING DISCUSSION, WE C LARIFY AND HOLD THAT THE ORDER OF THE TRIBUNAL DATED 31.2.2007, HAVING CONSI DERED AND ADJUDICATED ON ALL THE ISSUES INVOLVED IN THE GROUNDS RAISED BEFORE IT , THERE IS NO MISTAKE THEREIN WARRANTING RECTIFICATION/RECALL THEREOF, SO AS TO A DJUDICATE AND RENDER FINDINGS ON ANY ISSUE THAT REMAINED OMITTED TO BE CONSIDERED IN THE ORDER OF THE TRIBUNAL. 15. IN THE RESULT, ASSESSEES APPLICATION IS DISP OSED OF PRO TANTO . ORDER PRONOUNCED IN THE OPEN COURT ON 21.5.2013 SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DT/- 21ST MAY, 2013 COPY FORWARDED TO: 1. SHRI M.SRI RAM PRASAD, FLAT NO.201, ROHINI APARTMENTS, H.NO.8-3-07-/12, SRINAGAR COLONY, HYDERABAD 2 . ASST. COMMISSIONER OF INCOME - TAX CIRCLE 3(1), HYDERABAD 3. COMMISSIONER OF INCOME - TAX(APPEALS) IV, HYDERABAD 4. 5. COMMISSIONER OF INCOME - TAX III HYDERABAD DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD B.V.S