Ram Kanwar V. Commissioner of Income Tax, Gurgaon

ITA/81/2015

AI Insights

The case involves an appeal by Ram Kanwar against the Commissioner of Income Tax, Gurgaon, concerning the assessment order for the block period from April 1, 1987, to February 18, 1997. The appellant raised three substantial questions of law regarding the issuance and service of a mandatory notice under section 143(2) of the Income Tax Act, the chargeability of exempt income, and the deductibility of expenses related to income charged under various sections of the Act. The Tribunal had previously upheld the assessment in part, leading to this appeal. The High Court dismissed the appeal on the grounds that the questions raised were either factual or did not meet the threshold of substantial questions of law.

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 794373 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 09-07-2015
• Assessment Year: misc
• Other Referred Cases: ACIT & another V Hotel Blue (2010) 3 SCC 259
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: S K YADAV
• Keywords: Block period; Exempt income; Mandatory Notice; Undisclosed income; Deducting expenses
• Section: 143(2); 158B(b); 5; 57; 29; 158(BC)

Judgement Text

"IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH ITA-81-2015 (O&M) Date of decision:- 09.07.2015 Ram Kanwar ...Appellant Versus Commissioner of Income Tax, Gurgaon. ...Respondent CORAM: HON'BLE MR. JUSTICE S.J. VAZIFDAR, ACTING CHIEF JUSTICE HON’BLE MR. JUSTICE G.S. SANDHAWALIA Present: Mr. S.K. Yadav, Advocate, for Mr. Sachin Bhardwaj, Advocate, for the appellant. * * * * S.J. VAZIFDAR, A.C.J. (ORAL) This is an appeal against the order of the Tribunal dated 08.08.2014 upholding the assessment in part. The matter pertains to the block period 01.04.1987 to 18.02.1997. 2. The appellant/assessee contends that the following three issues raise substantial questions of law:- “(i) Whether under the facts & circumstances of the case, additional ground of appeal qua the issuance & service of mandatory notice u/s 143(2) is sustainable and (or) validly declined to be raised for the first instance before the Tribunal in pursuance to ACIT & another V Hotel Blue (2010) 3 SCC 259? (ii) Whether the ‘chargeability of exempt income’ to the share of coparcener as falling in pursuance bank deposits (Rs. 50 lacs) qua the sale of ancestral HUF property & admitted by AO is required to be considered while determining undisclosed income u/s 158B(b) of the Act? (iii) Whether under the facts & circumstances of the case, while arriving at the chargeable income u/s 5 read with Sections 29, 57, 158 BC of the Act, there is a requirement under the ‘authority of law’ for granting the allowance for the deducting of expenses relatable to the ‘income charged’?” AMODH SHARMA 2015.07.10 15:55 I attest to the accuracy and authenticity of this document chandigarh ITA-81-2015 (O&M) 2ٰ Re: Question (i) 4. The first question sought to be raised is purely one of fact. The appellant contended that the notice under Section 143(2) of the Income Tax Act, 1961 (in short the Act) had not been served upon him. However, as rightly noted by the Tribunal, the original assessment order mentions the service of the notice under Section 143(2) of the Act. It is important to note that the assessee filed an appeal before the CIT (Appeals), but did not dispute the service of the notice under Section 143(2) of the Act upon him. It is even more important to note that the CIT (Appeals) set aside the assessment order and directed the Assessing Officer to pass a fresh order. Even at that stage, the assessee did not raise any grievance about not having been served with the notice. Furthermore, the fresh assessment order also mentions the service of the notice under Section 143(2) of the Act upon the assessee. The assessee filed an appeal against this order before the CIT (Appeals), but even at that stage did not dispute the service of the notice under Section 143(2) of the Act. Even in the appeal before the Tribunal, this grievance was not raised. Instead, it was sought to be raised for the first time only in the year 2009 by way of an additional ground. In these circumstances, it would have been surprising if the Tribunal had accepted the contention of the assessee that he had not been served with the notice. 5. In these circumstances, it is only a pure question of fact and raises no question of law. Re: Question (ii) 6. The assessee has filed a rectification application before the Tribunal which is pending. The appellant will be at liberty to file a fresh appeal against the impugned order of the Tribunal and the order on the application that may be passed, if he so desires. AMODH SHARMA 2015.07.10 15:55 I attest to the accuracy and authenticity of this document chandigarh ITA-81-2015 (O&M) 3ٰ Re: Question (iii) 6. Question (iii) also does not raise a question of law. The assessee claimed a deduction of ` 19,83,350/- on account of commission and expenditure incurred by him while brokering/arranging transactions regarding the sale of various properties. The Tribunal observed that the assessee had not maintained complete details of the expenditure incurred in this respect. The Tribunal has in fact taken a liberal view and allowed a deduction of ` 10 lacs while observing that the assessee would have incurred some expenditure towards brokerage, commission, conveyance, documentation etc. There is nothing perverse or irrational in the order of the Tribunal in this regard. 7. The appeal in respect of questions (i) and (iii) is, therefore, dismissed. The appellant, however, is at liberty to file a fresh appeal against the order that may be passed by the Tribunal upon the rectification application. (S.J. VAZIFDAR) ACTING CHIEF JUSTICE (G.S. SANDHAWALIA) JUDGE 09.07.2015 Amodh AMODH SHARMA 2015.07.10 15:55 I attest to the accuracy and authenticity of this document chandigarh "