SHRI CHATTAR SINGH V. THE DEPUTY COMMISSIONER OF INCOME-TAX

ITA/701/2007

AI Insights

The case involves an appeal by Shri Chattar Singh against the ITAT's decision, which upheld the Block Assessment Order determining undisclosed income of Rs.1,17,24,710 for the assessment years 1989-90 to 1999-2000. The primary contention was regarding the addition of Rs.45,00,000 as undisclosed income, which the assessee claimed was a loan to Sri G. Chandrashekar that had been returned. The Tribunal and the High Court found the assessee's explanations unconvincing and unsupported by evidence, leading to the dismissal of the appeal.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 694132 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 08-12-2014
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: JEEVAN NEERALGI
• Assessee Lawyers: A SHANKAR; M LAVA
• Keywords: Assessment Order; Block assessment; Income tax appeal; Search and seizure; Undisclosed income
• Section: 132; 158BC; 158BB; 260-A

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA, BANGALORE DATED THIS THE 8th DAY OF DECEMBER, 2014 PRESENT: THE HON'BLE Mr.JUSTICE N.KUMAR AND THE HON'BLE Mr.JUSTICE B.MANOHAR INCOME TAX APPEAL NO.701/2007 BETWEEN: Shri Chattar Singh, Prop: M/S.Meenakshi Paper Agencies, E-6/125, Balaji Complex, Sultanpet, Bangalore-560 053. ...APPELLANT (BY SRI.A.SHANKAR & M.LAVA, ADVS.) AND: Deputy Commissioner of Income Tax, Circle – 3(1), Unity Building Annexe, Mission Road, Bangalore-27. ...RESPONDENT (BY SRI.JEEVAN J.NEERALGI, ADV.) This I.T.A. is filed u/s.260-A of I.T. Act, 1961, arising out of order dated 11.05.2007, passed in IT (SS) A 29/Bang/2005 for the Block Assessment Year 1989- 90 to 1999-2000, praying that this Hon’ble Court may be pleased to: 2 i. formulate the substantial questions of law stated therein, ii) allow the appeal and set aside the order passed by the ITAT, Bangalore in IT(SS)A 29/Bang/2005 dated 11.05.2007, in the interest of justice and equity. This appeal coming on for final hearing, this day, N.KUMAR, J., delivered the following: J U D G M E N T The assessee has preferred this appeal against the Block Assessment Order which has been upheld by the Tribunal after reversing the order passed by the First Appellate Authority. 2. The assessee is an individual assessed the income tax. On 24.8.1999 a search was conducted in the premises of the assessee under Section 132 of the Income Tax Act, 1961, (hereinafter referred to as ‘the Act’ for short). The business and residential premises of the assessee was also searched during the proceedings. 3. In pursuance to the notice issued under Section 158BC of the Act, the assessee filed his returns of income relating to the undisclosed period. An order of assessment came to be passed determining the total 3 undisclosed income of Rs.1,17,24,710/- and imposed tax of Rs.70,34,826/-. Aggrieved by the said order, assessee preferred an appeal to the Commissioner of Income Tax (Appeals). The First Appellate Authority by his order dated 25.02.2005 set aside the order of the assessing authority and allowed the appeal. Against the said order the revenue preferred an appeal to the Tribunal. The Tribunal allowed the appeal and set aside the order of the First Appellate Authority. Aggrieved by the said order, the assessee is before this Court. 4. The substantial questions of law which are raised in the appeal are as under: i) Whether the Tribunal was justified in law in reversing the findings of the CIT (A) in respect of an addition of Rs.45,00,000/- on the facts and circumstances of the case and consequently passed a perverse order? ii) Whether the Tribunal is justified in law in not holding that in view of the provisions of Section 158BB, no amount is taxable under the Block Assessment proceedings? iii) Whether the Tribunal was justified in law in confirming the Assessing Officer’s Order when the 4 statements based on which the addition was made stood retracted and further affirmed by the statements recorded from the concerned parties in section 131 proceedings? iv) Without prejudice whether the Tribunal was justified in not accepting the peak credit of the Appellant advances to Sri G.Chandrashekar and compute total income on the said basis? 5. Learned counsel for the assessee assailing the impugned order contends, the Tribunal though has passed a very lengthy order, it has not put to the assessee several judgments on which reliance is placed. It has not taken into consideration the fact that a sum of Rs.29,00,000/- utilized for purchasing the property and money received back from Chandrashekar which has been accepted by the department, against which no appeal is preferred. The five reasons given by the Tribunal are perverse and therefore he submits either the order of the Tribunal is liable to be set aside or at- least the matter has to be remanded back to the Tribunal for fresh consideration after giving an 5 opportunity to the assessee to meet the grounds which are pointed out in the impugned order. 6. Per contra, learned counsel for the revenue submits, the question before the Court is whether the assessee who admitted payment of Rs.45,00,000/- to the Chandrashekar has proved that he has returned the money and if the return is not established, no case for interference is made out. This is purely a question of fact. No substantial question of law would arise for consideration. 7. We have gone through the lengthy orders passed by the Tribunal as well as the First Appellate Court. The undisputed facts are, on the date the search took place i.e. on 24.8.1999, the assessee admitted that he had lent Rs.45,00,000/- as loan on payment of interest at 12%. However, on 1.10.1999, he contended that what is due from Chandrashekar is only Rs.19,00,000/- which is the undisclosed income. Peak credit is Rs.19,00,000/- on which he offered to pay tax 6 and paid tax. Therefore, the finding that Rs.45,00,000/- is undisclosed income is not correct. 8. In the first instance, after admitting Rs.45,00,000/- as the money paid to Chandrashekar by way of loan on payment of interest at 12%. When statement was recorded in the course of such proceedings, he categorically stated that he did not want to furnish the address, telephone number and location of the house of Sri G.Chandrashekar. He refused to answer the question how he came to know Sri G.Chandrashekar. He further refused to reveal who brought Sri G.Chandrashekar to him. He has stated that he has given the amounts to Chandrashekar at his residence. He has categorically stated that these transactions are in the nature of hand loan. These amounts are not advanced to Sri G. Chandrashekar on account of any assets or immovable property on behalf of him as a family member. The rate of interest is 12% per annum. He was not able to state what was the present position on the day of search. He would intimate the position on the next day. He admits that 7 the said loan transaction are not recorded in any of his books of account on his own concern nor other concern in the books of account of his family members/relatives. The source of funds for the advance of loan has comes from his business sources which he has not accounted for in the regular books of account, and he volunteered to offer the undisclosed income for taxation in his individual hands. In respect of a sum of Rs.29 lakhs which has been paid to Mr. Srinivasulu out of the undisclosed income he offered the same for tax. It is in this background, we have to appreciate this case and the materials on record. 9. Insofar as his case that, G. Chandrashekar returned the money and the balance of undisclosed money is only Rs.19 lakhs is concerned, no material is produced to substantiate the said stand. The reasoning given for the return was that the said money was given to G. Chandrashekarfor for purchase of paper. As the paper was not available in the market, he returned the money. It was in the nature of a trade advance. This fact is also not substantiated by any acceptable 8 evidence. It was contended when benefit was given regarding Rs.29 lakhs which was utilised for purchase of property from Srinivasulu, the return of the said amount out of Rs.45 lakhs is clearly established and the same having been accepted by the Department, they have not preferred any appeal challenging the said findings, which shows that Rs.29 lakhs was returned. The Tribunal considered each and every aspects of this matter and has come to the conclusion that this theory of payment of money for purchase of paper and the money has been returned by Chandrashekar as the paper is not available in the market do not induce confidence. When once these amounts are not mentioned in the account book, the dates which he has given showing the date of payment and the date of repayment also cannot be believed. All these have to be viewed in the background of what the assessee has stated in the earliest point of time. There is a total shift of the cause shown when once he has admitted that Rs.45 lakhs is a business income and the said business income is not reflected in the books of account and at 9 the earliest point of time the assessee refuses to disclose the name and the address of the person to whom the said amount is lent and virtually refuses to co-operate with the assessing authority, we are of the view that, these technical arguments advanced before the authorities as well as before us goes to the background and do not deserves to be considered sympathetically. In fact the assessee is not aware of the language English and all the correspondences are in the language of English. He had the assistance either of a Tax Consultant or the person who is well versed in the language of English. 10. In that view of the matter, we are satisfied that the Tribunal on an over all appreciation of the material on record has rightly interfered with the order of the first appellate authority in holding that the theory of refund is not established and the assessee is liable to pay tax on the undisclosed income of Rs.45 lakhs. In fact this finding is purely based on facts and no substantial question of law really does arise for consideration. If do arise, which are framed in the case, 10 they are answered against the assessee and in favour of the revenue. No merits. Dismissed. Sd/- JUDGE Sd/- JUDGE AP "