Smt. Konda Sanieeva Rani, Wo Konda and Smt. Konda Radhika, Wo Konda V. Asst. Commissioner of Income Tax, Circle-I, Karimnagar

ITTA/206/2007

AI Insights

The case involves appeals by Smt. Konda Sanieeva Rani and Smt. Konda Radhika against the order of the Income Tax Appellate Tribunal, which had restored the addition of Rs. 4,00,000 each as undisclosed income for the block period 1989-90 to 1999-2000. The Tribunal's decision was based on statements made by the husbands of the assessees during search proceedings under Section 132 of the Income Tax Act, 1961, admitting to a total investment of Rs. 15 lakhs in construction, of which only Rs. 7 lakhs was accounted for. The High Court dismissed the appeals, agreeing with the Tribunal's reliance on the statements made during the search as valid evidence.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 798544 (HC-TELANGANA)
• Appeal Type: Others
• Pronouncement Date: 09-12-2024
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax vs. Harjeev Agarwal, Commissioner of Income-Tax, Hyderabad vs. Naresh Kumar Agarwal, Pullangode Rubber Produce Co. Ltd vs. State of Kerala, Thiru A.J. Ramesh Kumar vs. Deputy Commissioner of Income Tax, Commissioner of Income-Tax vs. Hotel Meriya
• Laws Referred To: Income Tax Act, 1961, Indian Evidence Act, 1872
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: P KRISHNA
• Assessee Lawyers: A V A KARIKEYA; A V KOUNDINYA
• Keywords: Block period; Commissioner of Income Tax (Appeals); Income tax appellate tribunal; Search and seizure; Unexplained investment
• Section: 132; 260A; 132(4); 1588D

Judgement Text

"[ 3418 ] IN THE HIGH COURTfOR THE STATE OF TELANGANA AT HYDERABAD MONDAY, THE NINTH DAY OF DECEMBER TWO THOUSAND AND TWENTY FOUR PRESENT THE HONOURABLE THE CHIEF JUSTICE ALOK ARADHE AND THE HONOURABLE SRI JUSTICE J SREENIVAS RAO IN ME TAX TRIBUNA L APPEAL NOS: 205 AND 206 oF 2007 INCOME TAX TRIBUNAL APPEAL NO: 205 OF 2007 Appeal filed under Section 260A of the lncome Tax Act' 1961 against the orderdated15-12-2006passedinl.T.(SS).A.No.118/Hyd/03(BlockPeriod1989-90 to 1999-2000) on the file of the lncome Tax Appellate Tribunal' Hyderabad Bench 'A', Hyderabad, preferred against the Order dated 03-07-2003 passed in Appeal No' 556/DCIT,KRM/C|T(A).|ll/02{3onthefileoftheCommissioneroflncomeTax (Appeals - lll), Hyderabad preferred against the Order dated 30-08-2001 passed in PAN/GIRNo.R-816onthefileoftheDeputyCommissioneroflncomeTax,Circle- 1 , Karimnagar Between: Smt. Konda San.ieeva Rani, Wo Konda Karimnagar District Ramesh, 4-1-817, OsmanPura' ...Appellant AND Asst. Commissioner of lncome Tax, Circle-|, Karimnagar ...Respondent INCOME TAX TRIBUNAL APPEAL NO :2OG OF 2OO7 Appeal filed under Section 260A of the lncome Tax Act' 1961 against the orderdatedls-12-2oo6passedin|.T.(SS).A.No.119/Hyd/03(BlockPeriodl989.90 to 1999-2000) on the file of the lncome Tax Appellate Tribunal' Hyderabad Bench 'A', Hyderabad, preferred against the Order dated 15-07-2003 passed in Appeal N6' 767lAClT KRM/ClT(A)-ltl/02-03 on the tile of the Commissioner of lncome Tax r (Appeals - lll), Hyderabad preferred against the order dated 30-09_2002 passed in PAN/GIR No ACrr. cir-i / R-956 on the fire of the Assistant commissioner of lncome Tax, Circle - I, Karimnagar. Between: Smt. Konda Radhika, 4-1-9t7, Osmanpura, Karimnagar ...Appellant AND Asst. Commissioner of lncome-Tax, Circle_1, Karimnagar ...Respondent Counsel for the Appellant Mr AVA Siva Karikeya Rep Mr AV Krishna Koundinya (in Both the Appeats) Mr P Murali Krishna Senior Counsel for lncome Tax (in Both the Appeals) Counsel for the Respondent The Court delivered the following Common Judgment : THE HON'BLE THE CHIEF JUSTICE ALOK ARADHE AND THE HON'BLE SRI JUSTICE J.SREENTVAS RAO I.T.T.A. Nos.2OS and,2o6 of 2OO7 COMMON JUDGMENT: (Per the Hon'ble the Chief Justice Alok Aradhe) Mr. A.V.A. Siva Kartikeya, learned counsel represents Mr. A.V. Krishna Koundinya, learned counsel for the appellants. Mr. P. Murali Krishna, learned counsel for the respondent (Revenue) 2. These appeals hled by the assessees under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as \"the 196 1 Act\") emanate from common order dated 15.12.2006 passed by the Income Tax Appellate Tribunal (hereinafter referred to as \"the Tribunal\"). 3. The subject matter of these appeals pertains to block period 1989-1990 to L999-2OOO. The appeals were admitted on the following substantial question of law: r.f 2 \"Whether the income tax appellate tribunal committed an error of law in reversing the u,ell reasoned order dated O3.OZ.2OO3 passed by 1.he Commissioner of Income Tax Appeals and id ordering deletion of addition of a sum of Rs.4,00,000/- on account of unexplained investment in the house property?,, 4. Facts giving rise to hling of the appeals briefly stated are that the husbands of the assessees, namely, Konda Ramesh and Konda Srinivas, are the partners of M/s. Hanuman Parboiled Rice and Oil Mill, a partnership firm. A search under Sectiorl 132 of the 196 1 Act was conducted on 09.03. 1999 at the residence of Sri Konda Ramesh, namely, the husband of assessee in ITTA.No.2OS of 2OOZ as well the office of the pertnership firm. The sea_rch operations were completed on 05.05.1999. Certain material was found in the residentia.l premises in respect of the expenditure incurred for construction of residentia_l-cum-shopping .i1 compiex at Osmanpura, Karimnagar, which was seized' The husbands of the assessees, during the course of search operations, made statements under Section 132(41 of the 196 1 Act that total investment in the construction was Rs.15 lakhs whereas only a sum of Rs'7 lakhs was accounted lor. 5. Thereafter, show cause notices dated 07'09'2000 under Section 1588D of the 1961 Act were issued to the assessees seeking explanation on various points mentioned in the noLice. The assessees were asked to show cause why a sum of Rs'll lakhs should not be brought to assessment as undisclosed income for the block period. The assessees filed their returns showing NIL as their undisclosed income' The Assessing Oflicer' by an order dated 30.08.200 1, inter alia held that the assessees' husbands, during the course of search proceedings, had categorically admitted that the total investmentintheconstructionwasRs.15lakhsonlyarrd 4 the accounled portion was Rs.7 lakhs. The Assessing Officer, on the basis of admission made under Section 132(4) of the 196 1 Act during the course of search proceedings . inter alia, held that there is no proof to the contrarJr ancl accordingly treated the difference amount of Rs.8 lakhs as unexplained investment and since both the assessees had SOo/n share in the construction, he, therefore treated Rs.4 lakhs each as undisclosed investment lbr the block period in the hands of the ASSCSSCCS. 6 Being aggrieved, the assessees filed appeals before the Commissioner of Incorne Tax (Appeaf s). The Commissioner by an order dated O3.O7.2OO3, inter alia, held that the Assessing Ofhcer erred in making the addition of Rs.4 lakhs each as undisclosed income solely on the basis of sworn statements made by their husbands at the time of search. It was further hekl that the statement.s made at the time of search cannot be 5 made the sole basis for making an order of assessment. It was also held that the Assessing Ofhcer should have referred the issue pertaining to the cost of construction to the Valuation Celt and got the valuation conducted by the Departmental Valuation Oflicer and should have arrived at the correct cost of construction. A finding was recorded that in arry case the Assessing Ofhcer should have got the valuation done by the Inspector attached to him. Accordingly, the order passed by the Assessing Offrcer was set aside. 7. Being aggrieved by the aforesaid order, ttre Revenue hted the appea.ls before the Tribunal. The Tribunal by a common order dated 15.12.2006, inter alia, held that the husbands of the assessees in the statements made under Section L32{41 of the 1961 Act had categorically stated that the investment made on the construction was Rs.15 lakhs. It was further held that mere opinion of a valuer cannot obliterate the statemerrts made by the husbands 6 of the assessees. It was also held that in case the statements made by the husbands of the assesseers at the time of search were not correct, the assessees should have brought some cogent materia-l to disprove the same The Tribunal therefore set aside the orders passed by the Commissioner of Income Tax (Appeals) and restored the addition in case of both the assessees. Hence, these appeals. 8. Learned counsel for the assessees submitted that the Tribunal ought to have appreciated that mere statements of the husbands of the assessees at the time of search, cannot form the basis to assess the in<:ome of the assessees. It is submitted that the statements made under Section 132(4) of the 1961 Act during the course of search proceedings ought to be accompanied by the material which may be coliected during the course of search proceedings. 7 g. In support of the aforesaid submissions, reliance has been placed on the decisions of the Delhi and the erstwhile Andhra Pradesh High Courts in Commissioner of tncome-Tax vs. Harjeev Aganral I and Commissioner of lncome-Tax, Hyderabad vs' Naresh Kumar Agarwal2. 10. On the other hand, learned counsel for Revenue has submitted that no substantial question of law arises for consideration in these appeals and the Tribunal has recorded cogent the reasons for setting aside the order passed by the Commissioner of Income Tax (Appeals)' It is further submitted that the Assessing Officer had rightly relied on the statements recorded under Section i-32$l of the 1961 Act during the course of search proceedings and the Tribunat has rightly restored the order passed by the Assessing Offrcer' t 120161 70 Taxmann.com 95 (Oelhi) ' 120151 53 Tarmann.com 306 (Andhrsfraglesh) -T 8 1 1. In support of his submissions, referenr:e has been made to Division Bench decisions of High Courts of Madras and Kera,la in Thiru A.J. Ramesh Kumar vs. Deputy Commissioner of Income Tax a and Commissioner of Income-Tax vs. Hotel Meriyaa. 12. We have considered the rival submissions and have perused the record. 13. Section 132 of the 1961 Act deals with Search ald Seizure. Section B2g) of the said Act provides that authorized offrcer may during the course of search or seizure examine on oath any person who is found to be in possession or control of any books of account, document.s, money, bullion, jewellery or other va_luable article or thing ald any statement made by such person during such examinalion may thereafter be used in evidence in any proceeding und.er the Indiaa Income_Tax t 12022; 139 tarrnann.com 190 (Mad{atL '(2010) 19S Taxman 4S9 (Kerata) 9 Act, 1922 or under the 1961 Act. Explalation to Section 132(4) provides that examination of ary person relerred to in Section 132(4) may not be merely in respect of any books of account, other documents or assets found as a result of the search, but also in respect of all matters relevant for the purposes of any investigation connected with any proceeding either under the Indian Income-Tax Act, 7922 or under the 1961 Act. 14. Thus, it is evident that a statement recorded under Section 132(4) of the 1961 Act is evidence within the purview of evidence under Section ISBBD of the 196 1 Act read with Section 3 of the Indian Evidence Act, 1872 and Section 131 of the 1961 Act and is admissible in evidence. 10 15. The Supreme Court in Pullangode Rubber Produce Co. Ltd vs. State of Keralas in paragraph 4 held as follows: \"4. There is material on record to show that in respect of the assessment year 1963-64, the year previous to ttre one with which we are concerned in this case, the Tribunal refused to refer similar questions which the assessee wanted it to refer to the High Court. But, at the instance of the assessee those questions were referred to the High Court as ordered by the High Court and the High Court answered those questions in favour ol the assessee. It is no doubt true that entries in the account books of the assessee amount to an admission that the amount in question was laid out or . expended for the cultivation, upkeep or maintenance of immature plalts from which no agricultural income u,as derived during the previous year. An admission is an extremely importaht -piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is incorrect. \" ' 1rs;:1 st rn rs 1sc1 An admission is an extremely important piece of evidence, but the same is not conclusive as it is open for the person making admission to show that it is incorrect' 16. In ttre instant cases, the husbands of the assessees made statements under Section B2$) of the 1961 Act during the course of search' The fact that total cost of construction was Rs.15 lakhs was reiterated by the assessees on O3.05.1999. Once the statements were recordedonoath,thestatementshadanevidentia4r value and the presumption is that the statements made under Section 132(41of the 1961 Act are true ald correct unless the assessees plead that the statements have been obtained forcibty or by coercion or undue influence' Once the statements are recorded under Section B2$l of the 1961 Act, the sarne can be used as evidence against the assessees. In such a case, the burden lies on the assessees to establish that the admission made in the statements is either incorrect or wrtrng' 11 72 77. In the instaat cases, the assessees have tailed to discharge the said burden. It is not the case of the assessees that their husbands made statements either under coercion or undue influence. No attempt has been made by the assessees to explain such a, admission. Therefore, in the facts and circumstances of the case, the Tribuna.l rightly set aside the order passed by the Commissioner of Income_Tax (Appeals). 18. It is pertinent to note that the Division Bench of the Delhi ald erstwhile Andhra pradesh High Courts in Harjeev Agarwal (supraf ald Naresh Kumar Aganrral (supraf did not consider the decision of the Strpreme Court in pullangode Rubber produce Co. Ltd (supraf. The aforesaid decisions a-re not applicable to the fact situation of the present cases. 19. In view of the preceding paragraphs and for the aforementioned reasons, the substarrtial question of law 13 To, 1. 2 3, 4. 5, 6. 7. VA/gh YY framed by this Court is answered in favour of the Revenue and against the assessees 20. In the result, the appeals fail ald are hereby dismissed. Miscellaneous applications, if any pending, shall stand closed. There shall be no order as to costs. Sd/. K. SRINIVASA AO /ffRUE COPYII JOINT REGIS SECTION OF ICER The lncome Tax Appellate Tribunal, Hyderabad Bench ,A,, Hyderabad The Commissioner of lncome Tax (Appeals _ lll), Hyderabad The Deputy Commissioner of lncome Tax, Circle_.1, Karimnagar The Assistant Commissioner of lncome Tax, Circle _ 1, Karimnagar One CC to Sri AV Krishna Koundinya, Advocate [OPUC] One CC to Sri P Murali Krishna, Advocate IOPUCI Two CD Copies HIGH COURT DATED:09112t2024 COMMON JUDGMENT lTTA.Nos.20s & 206 of ZOOT DISMISSING BOTH THE APPEALS q@fl\"b tr#, q {r r-tE ti i'..i, , 2I 0E[ '-.; -) l' l 1.r.'& Drr ;,.. t r.l --:- ! "