PR COMMISSIONER OF INCOME TAX 4 V. M/S JANSON INVESTMENTS PVT LTD

ITA/472/2017

AI Insights

The case revolves around an income tax appeal filed by the Revenue against M/s Janson Investments Pvt Ltd concerning the assessment years 1991-92 to 2001-02. The appeal challenged the order of the Income Tax Appellate Tribunal, which had deleted the additions made by the assessing authority regarding unexplained investments and bogus expenditures. The Tribunal's decision was based on the lack of concrete evidence from the assessing officer and the acceptance of the assessee's explanation that only a lesser amount was paid for the transactions in question. The High Court's judgment focused on whether the Tribunal was correct in its findings and whether the assessing officer had adequately verified the claims and evidence presented.

• Counselvise Citation: [2021] 140 COUNSELVISE.COM (IT) 728414 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 27-09-2021
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: A SHANKAR; BHAIRAVKUTTAIAH
• Assessee Lawyers: SANMATHI
• Keywords: Block assessment; Bogus Expenditure; Income tax appeal; Unexplained investments; Search materials
• Section: 143(3); 69C; 158BC; 260-A

Judgement Text

" IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 27TH DAY OF SEPTEMBER, 2021 PRESENT THE HON’BLE MRS.JUSTICE S.SUJATHA AND THE HON’BLE MR. JUSTICE RAVI V. HOSMANI I.T.A.No.472/2017 BETWEEN : 1. PR COMMISSIONER OF INCOME TAX-4, BMTC COMPEX, KORAMANGALA, BANGALORE 2. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE 1(5), BENGALURU. ...APPELLANTS (BY SRI SANMATHI.E.I., ADV.) AND : M/S JANSON INVESTMENTS PVT LTD., NO.75-76, COMMERCIAL STREET, BANGALORE, PAN : AAACJ2892C. …RESPONDENT (BY SRI A.SHANKAR, SENIOR COUNSEL A/W. SRI BHAIRAV KUTTAIAH, ADV. FOR SRI M.LAVA, ADV.) THIS INCOME TAX APPEAL IS FILED UNDER SECTION 260-A OF INCOME TAX ACT 1961, ARISING OUT OF ORDER DATED 16/12/2016 PASSED IN IT(SS)A NO.8/BANG/2014, FOR THE ASSESSMENT YEAR 1991-92 TO 24/01/2001, PRAYING THIS HON'BLE COURT TO DECIDE THE FOREGOING QUESTION OF LAW AND / OR SUCH OTHER QUESTIONS OF LAW AS MAY BE FORMULATED BY THE HON'BLE COURT AS DEEMED FIT AND SET ASIDE THE ORDER DATED 16/12/2016 PASSED BY THE ITAT, 'B' BENCH, BENGALURU, IN IT(SS)A NO.8/BANG/2014 FOR - 2 - ASSESSMENT YEAR 1991-92 TO 24/01/2001 AS SOUGHT FOR IN THIS APPEAL; AND TO GRANT SUCH OTHER RELIEF AS DEEMED FIT, IN THE INTEREST OF JUSTICE. THIS APPEAL COMING ON FOR HEARING, THIS DAY, S. SUJATHA, J., DELIVERED THE FOLLOWING: J U D G M E N T This appeal is filed by the Revenue under Section 260-A of the Income Tax Act, 1961 [‘Act’ for short] challenging the order dated 16.12.2016 passed in I.T.(S.S)A.No.8/Bang/2014 by the Income Tax Appellate Tribunal, Bangalore Bench ‘B’, Bengaluru (‘Tribunal’ for short) relating to the assessment years 1991-92 to 2001-02. 2. Revenue has also filed another appeal in ITA No.471/2017 challenging the order of the Tribunal relating to the assessment years 1991-92 to 2001-02 in the very same assessee’s case. 3. This appeal was admitted by this Court to consider the following substantial questions of law: “1. Whether, on the facts and in the circumstances of the case, the Tribunal is right - 3 - in law in deleting the addition made by assessing authority with regard to unexplained investments by erroneous holding that there is no evidence brought on record by assessing authority and no opportunity was granted to assessee to cross examine the witnesses without appreciating the contents of sized proved the unexplained investments made by assessee and assessing authority had made the addition on basis of search materials and not on basis of oral evidence of farmers? 2. Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the addition made by assessing authority with regard to bogus expenditure on lands by holding that the sister concern of the assessee namely, M/s. Jansons Architectural and Interior Consultants Bangalore [JAIL] has offered to tax to the above expenditure as its income without considering the issue that whether the said expenditure claimed by assessee on lands is bogus or not by also ignoring the fact that assessing authority had verified the books of account of sister - 4 - concern which was reproduced in the assessment order and as such the order passed by Tribunal is perverse in nature?” 4. However, having heard the learned counsel appearing for the parties and considering the material on record, we re-formulate the substantial question of law as under: “Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in deleting the addition made by assessing authority with regard to unexplained investments by erroneous holding that the assessing authority has not furnished its report after verifying the recipient even when the onus/burden is on the assessee to prove the veracity of evidence found against him in the course of search as per section 69C of the Act and without considering the contents of seized materials?” 5. This is the second round of litigation inasmuch as the issues involved herein are concerned. The assessee is a company and carrying on business of real estate. Pursuant to the search action conducted on - 5 - 24.01.2001 in the premises of the assessee as well as at the residents of the Directors of the company, some incriminating materials were seized from the premises of the assessee. After conclusion of search operation, proceedings were initiated under Section 158BC of the Act and called upon the assessee to file its undisclosed income. The block assessment proceedings were concluded by the order passed under Section 158BC read with Section 143[3] of the Act on 13.01.2003. In the said proceedings, the Assessing Officer added certain additions as under: “a) Unexplained income from Jansons Mall: Rs.20 lakhs. b) Unexplained investment in lands at Buttanahalli: Rs.84,62,805. c) Bogus expenditure claim in respect of the land in Gooliyanandagunda village: Rs.92,00,200.” 6. Being aggrieved, the assessee preferred appeal before the Commissioner of Income Tax [Appeals] who - 6 - partly allowed the appeal by canceling the levy of surcharge but upheld the determination of undisclosed income assessed by the Assessing Officer. On further appeal before the Tribunal, both the assessee as well as the Department challenged the said order of the Commissioner of Income Tax [Appeals]. The Tribunal partly allowed the appeal of the assessee dismissing the appeal of the Revenue, remanding the matter to the Assessing Officer for fresh adjudication by referring to the order of the sister concern and also by confronting the same to the assessee with all material in this connection. 7. Pursuant to the said directions issued by the Tribunal, the Assessing Officer has passed the order confirming the addition made in the earlier round, with respect two items i.e., unexplained investments land in Buttanahalli of Rs.82,86,250/- and bogus expenditure on lands at Gooliyanandagunda of Rs.92,00,200/-, modifying the unexplained expenditure with respect to - 7 - Janson Mall at Rs.2,00,000/- instead of Rs.20,00,000/- i.e., giving relief to the extent of Rs.18,00,000/-. 8. Being aggrieved, the assessee has preferred appeal before the Commissioner of Income Tax [Appeals] which came to be allowed in part against which the assessee preferred appeal inasmuch as restricting the addition to Rs.2,00,000/- as regards unexplained income from Jansons Mall whereas the Revenue preferred appeal with respect to the relief given to the assessee. The Tribunal allowed the appeal of the assessee and dismissed the appeal of the Revenue. Being aggrieved, this appeal is preferred by the Revenue against the findings of the Tribunal with respect to unexplained investments in Janson mall. Re. Substantial question of law. 9. Learned counsel for the Revenue referring to Section 69C of the Act, submitted that the burden was on the assessee to prove that Mr.J.Dass has received - 8 - only Rs.2,00,000/-. Such burden was not discharged by the assessee, no details of the income tax returns and the PAN number relating to Mr.J.Das was furnished by the assessee. Hence, the Tribunal ought to have considered the case on merits. 10. Learned Senior Counsel for the assessee submitted that the assessing officer in the first round, after noticing the incriminating material – a receipt for Rs.20,00,000/- seized during search, which indicated payment made to Mr.J.Das for vacating the property at Commercial Street, Bangalore, has stated in the order that the assessee company has made this payment on behalf of Madrasai Khuwathul Islam Committee, the original owners of the land. The Assessing Officer had recorded the statements of Mr.J.Das and the same was considered by the Commissioner of Income Tax [Appeals] and it has been recorded that to comply with the directions of the Tribunal, it was necessary to examine the assessment records of Mr.J.Dass. However, - 9 - no verification was done by the Assessing Officer before passing the re-assessment order. The direction issued by the Commissioner of Income Tax [Appeals] to submit demand report also was not complied with, despite several reminders issued. On recording these factual aspects, restricted the addition to Rs.2,00,000/- giving relief to Rs.18,00,000/-. The Tribunal has rightly allowed the appeal filed by the assessee in this regard dismissing the appeal of the Revenue since statement of Mr.J.Das were recorded wherein he has categorically admitted that he has received only Rs.2,00,000/- and not Rs.20,00,000/- as alleged by the Department. It was submitted that Section 69C would be applicable if the expenditure of Rs.20,00,000/- incurred is confirmed. There being no such confirmation, arguments of the Revenue deserves to be negated. 11. We have carefully considered the rival submissions of the learned counsel appearing for the parties and perused the material on record. - 10 - 12. It is not in dispute that in the first round prior to remand made by the Tribunal, the assessing officer has recorded the statements of Mr.J.Das. He [Mr.J.Das] had categorically stated that he has received only Rs.2,00,000/- from the assessee. This has been reiterated by the Commissioner of Income Tax [Appeals]. However, the Commissioner of Income Tax [Appeals] proceeded to sustain the addition of Rs.2,00,000/- deleting the addition of Rs.18,00,000/-. The statement of Mr.J.Dass being recorded by the assessing officer, now it cannot be contended by the Revenue that no particulars of Mr.J.Dass was available with the assessing officer to comply with the directions issued by the Tribunal. The Tribunal in the first round of litigation has observed thus: “4. The rival contentions in regard to the above have been very carefully considered. The person with whom negotiations were carried out, Mr.Das, apparently had contended to the effect that he had received Rs.2 lakhs - 11 - only. It is, therefore, necessary to verify the assessments framed in the hands of Mr.Das. This is with a view to verify whether he has been assessed for Rs.20 lakhs or the department had accepted that he had received only Rs.2 lakhs; if the amount claimed to have been received of Rs.2 lakhs only is accepted by the department then, the addition as unexplained payment to the tune of Rs.2 lakhs in the hands of the assessee would be unjustified. We, accordingly, remand this issue to the file of the Assessing Officer to verify the same with reference to the assessments framed in the case of Mr.J.Das.” 13. Thus, it was mandatory for the assessing officer to comply with the directions of the Tribunal. On appeal, Commissioner of Income Tax [Appeals] has given a finding as under: “4.5. A reading of the direction of the Hon’ble ITAT is clear on unambiguity that the assessment record of Mr.J.Das to be verified. However, as per assessment order dated 31.12.2008 reveals that the Assessing Officer - 12 - was asked to furnish details of Mr.J.Das, but the appellant expressed its inability to furnish any details regarding Mr.J.Das as he was no more. The Assessing Officer has not made any further enquiring at least she would have verified the assessment record of M/s. Reliable Press [Mr.J.Das] which is available in the department if Mr.J.Das used to file his return of income. Despite of the direction of the Hon’ble ITAT no verification has been made by the Assessing Officer before passing reassessment order. These facts also raised in the written submission as mentioned above and vide this office letter dated 01.09.2010 the Assessing Officer was asked to submit remand report, however no report received form the Assessing Officer. Thereafter, several reminders were issued but no reports were received till date.” 14. The ground of the Revenue that Mr.J.Das had expired and his particulars were not available with the Department to verify whether Mr.J.Das has been assessed for Rs.20,00,000/- or the department had accepted that he had received only Rs.2,00,000/- could - 13 - not be done, is a lame excuse and cannot be acceded to. It is well settled that the finding given by the Tribunal on pure questions of facts is not exigible to further adjudication while considering the matter relating to substantial question of law. No perversity is found in the findings recorded by the Tribunal. For the reasons aforesaid, we answer the substantial question of law in favour of the assessee and against the Revenue. In the result, appeal stands dismissed. Sd/- JUDGE Sd/- JUDGE NC. "